Revenue performance is in line with expectations, and financial performance highlights steady operation
1) Revenue performance is in line with expectations: for the full year of 2023, the company achieved revenue of 34.763 billion yuan, an increase of 11.9% year on year; realized profit of 2,640 billion yuan, up 22.2% year on year; realized net interest rate to mother of 7.59%, up 0.57 pct year on year. Other revenue and net income recorded a year-on-year increase of $980 million, an increase of 115.9%, mainly due to increases in government subsidies, interest income (up 70.2% year over year) and VAT excess deductions.
2) Sales continued the high trend: sales volume was about 16.5215 million units, up 17.92% year on year. Among them, electric cars sold 11.5611 million units, up 28.80% year on year, accounting for 70%, accounting for an increase of 5.9 pct year on year; sales volume of electric pedals was 4.9604 million units, a decrease of 1.47% year on year. The main reason is that the company fine-tunes the product structure in response to changes in customer preferences to meet the needs of different customer groups; at the same time, with improvements in technology, design, functionality, etc., the power of electronic products has been greatly improved, which is also an important reason.
3) The gross margin was slightly adjusted, and the cost & expense side remained stable: in 2023, the company recorded a gross margin of 16.9%, a year-on-year decrease of 1.2 pct; mainly due to adjustments in the company's product matrix. Sales/management/R&D/finance expenses in 2023 were 4.13%/3.18%/3.43%/0.13% respectively, up -0.24/0.29/ -0.13/-0.06pct year-on-year. The total cost rate for the period was 10.87%, which remained stable.
4) Abundant cash flow and healthy capital structure: Cash and cash equivalents of $7.914 billion in 2023, up 16.7% year on year, which is basically in line with the increase in net profit; the balance ratio fell from 26.8% in 2022 to 9.9% 5) The dividend ratio is high, showing confidence in using stocks in exchange for interest. The company expects to pay a dividend of HK48.0 cents per share (+20% year-on-year increase), with a dividend rate of around 3.3% for 2023 at the 2024/3/26 closing price. Implementing a “dividend in shares” plan means that eligible shareholders will have the right to choose to receive a final dividend in the form of all cash or all new shares or part of the new shares plus part of the cash to ensure sufficient liquidity while demonstrating the company's confidence in future development.
Review in 2023: Sales volume continues to lead the industry, and its leading position is stable on the product side: Yadi continues to invest resources to develop high-quality products. In 2023, it launched 33 new electric automatic devices and 16 new electronic pedals, all leading the industry in terms of design, level of intelligence, and performance. In particular, the electronic products market has had a good response, driving the company's sales growth rapidly.
Technology side: Battery technology investment continues to lead. In 2023, the battery division recorded revenue of 4.631 billion yuan, an increase of 19.67% over the previous year. The company launched the sodium-ion battery “Extreme Sodium 1” and the supporting model Extreme Sodium G25 in 2023. It has a series of advantages such as high safety, long life, fast charging, excellent durability at low temperatures, and excellent power, and continues to lead the industry in product strength.
Channel side: As of December 31, 2023, the company has more than 40,000 terminal franchised stores (2022: more than 32,000). According to Baidu's statistics on the number of the company's stores, as of December 3, 2022, the number of Yadi sales stores has reached 39,533. We believe that a significant number of stores will become Yadi's franchise stores in 2023, and the channel structure is being optimized. Channels are the key to competition in the two-wheeler industry. Yadi's store coverage is in a leading position in the entire industry. Currently, it has entered the merit selection stage and will continue to maintain its competitive advantage.
Looking forward to the future, it is expected that the volume and price of the industry will stabilize, and the company Alpha will still have a significant industry level: domestic sales volume and price are expected to stabilize, and sodium electricity is expected to revolutionize the technology route of the industry. The industry is a type of durable consumer goods that are just in demand, and has the characteristics of stable demand. We expect the long-term domestic industry space to reach about 70 million units; there is more than 20 million fuel and motorcycle replacement space in overseas Southeast Asia, and there is plenty of space at home and abroad. In the future, as the industry's leading product structure improves, various manufacturers will continue to launch new high-performance and sodium-electric products, which is expected to drive a steady recovery in ASP in the industry.
Company level: Deepening integration has led to product differentiation and a steep cost curve. Yadi is poised to advance as a pioneer in overseas and sodium electricity routes. ① The degree of integration has deepened. Following the company's acquisition of Nandu Huayu to incorporate the battery chain, the company acquired Wuxi Lingbo Electronics on March 17, 2024 to expand the electronic control process. Further deepening the integrated industrial layout is expected to open up the company's degree of product differentiation and cost leadership from other manufacturers. ② A pioneer in battery technology and overseas layout. The launch of sodium-electric two-wheelers is expected to continue Yadi's success in graphene batteries and continue to set Yadi's performance benchmarks and brand differentiation in the two-wheeler industry. In terms of overseas layout, the company's distribution map has expanded to more than 90 countries including Europe and Southeast Asia, and will become an important new growth curve for the company in the future. ③ Channel and product coupling strengthens core competitiveness. In terms of products, the company launched the “Guanneng 6” series with excellent performance in 2024, which is expected to maintain product leadership. In terms of channels, while optimizing domestic channels, new technology is combined with new channels, and domestic and foreign countries go hand in hand, further consolidating the leading position in the industry.
Profit forecast and valuation: High quality growth drives double whammy. The company with the alpha scarce target in the competitive cycle is the leading electric two-wheeler track brand. The company's revenue is expected to be 401.88/460.56/52,917 billion yuan in 2024-2026, up 15.6% /14.6%/14.9% year-on-year, and net profit to mother of 33.28/40.06/4.847 billion yuan, up 26.1%/20.4%/21.0% year-on-year. The price-earnings ratio corresponding to the current market value is 11.0/9.2/7.6 X. The company will maintain high-quality growth under the joint drive of the following three aspects: (1) the new national standard sets a competitive threshold and expand the total market volume; (2) continuous optimization of the product structure and leading style; and (3) determining overseas “electrification” to open up the blue ocean market. We believe that Yadi Holdings, as the leading two-wheeler brand, will drive the company's dynamic price-earnings ratio to 20-25 X and maintain a “buy” rating.
Risk warning
Industry market demand falls short of expectations; overseas market development falls short of expectations.