Event: The company released its 2024 quarterly report. In the first quarter of 2024, the company achieved operating income of 2,562 billion yuan, a year-on-year increase of 54.18%; realized net profit of 136 million yuan, an increase of 675.34% over the previous year; realized net profit without deduction of 142 million yuan, an increase of 16874.37% over the previous year.
Independent brands and the Xiaomi business are growing rapidly. By channel, the company achieved revenue of 1,88/4.22/252 million yuan respectively in 2024Q1, or +64.46%/+6.57%/+113.56% over the same period last year, with a high increase in independent brand revenue. Among them, looking at the spin-off of independent brands: electric two-wheelers achieved revenue of 1.19 billion yuan, an increase of 119.15% year on year (2024Q1 sales volume was 416,900 units, average price was about 2,854 yuan/unit, average price down 2.91% year on year); retail scooters/all-terrain vehicles/lawnmowers achieved revenue of 3.03/215/180 million yuan.
Profitability has improved markedly, and cost control is excellent. 1) Gross profit margin: 2024Q1's gross margin increased by 2.26pct to 30.48% year over year. The increase in gross margin was mainly due to the continuous increase in gross margin of products such as electric two-wheelers and all-terrain vehicles. 2) Rate side: The 2024Q1 sales/management/R&D/finance rate was 10.67%/7.08%/6.41%/-1.03%, with a year-on-year change of 0.4 pct/-1.15pct/-1.25pct/-2.19pct, with strong cost management capabilities. 3) Net interest rate: Overall, thanks to improvements in gross margin and cost efficiency, the company's 2024Q1 net margin changed 4.24pct to 5.29% year-on-year.
All scenarios cover intelligent travel, and quality creates enterprise development. In 2023, the company launched a new full-scene travel product, covering multiple scenarios such as short urban travel, daily commuting, travel, and outdoor activities. In addition, in March 2024, the company obtained the “Guangdong Quality Inspection Zhongcheng Certification Co., Ltd. New Electric Scooter First Voluntary Certification Certificate” issued by the Guangdong Quality Inspection Institute, and its No. 9 electric scooter E2 Pro also obtained the “First Qualification Test Report for the New National Standard for Electric Scooters” issued by the Institute. The product quality of Company 9 continues to help the industry achieve high-quality development.
Profit forecasting and investment advice. As the company continues to develop R&D revenue and market development, we expect net profit to be 737/8.77/1,067 million yuan respectively in 2024-2026, up 23.3%/19.0%/21.6%, maintaining the “gain” rating.
Risk warning: raw material price fluctuation risk, exchange rate fluctuation risk, geopolitical risk.