Event: The company released its 2024 quarterly report. The 24Q1 company achieved total revenue of 2.56 billion yuan, +54% year over year, in line with our previous forecast, and achieved net profit of 140 million yuan, +675% year over year, corresponding net interest rate of 5.3%, up 4.2 pcts year on year. The results for two consecutive quarters showed a sharp year-on-year recovery, exceeding market expectations.
Q1 All sectors have maintained rapid growth, and electric two-wheelers continue to be released. The No. 9 Overseas Gene (Segway brand+overseas channel advantage is prominent), product fission enters the harvest period (balance scooters - scooters - two-wheelers - all-terrain vehicles - lawn mowers - e-bikes), leading peers with intelligent technology. In the past 2023, Xiaomi and scooter sharing ToB businesses faced the dual challenges of falling, and growth in 2024 will accelerate:
1) Independent brands: electric two-wheelers achieved domestic sales of 415,000 units, achieving overall revenue of 1.19 billion yuan, and continued volume in the first quarter; retail scooters achieved sales of 152,000 units, achieving revenue of 300 million yuan, +8% year-on-year; all-terrain vehicles/lawnmowers achieved revenue of 220/180 million yuan, with sales volume of 5487/33,100 units; 2) ToB products: direct operating revenue of 420 million yuan, +7% year on year; 3) other revenue of 250 million yuan. The impressive revenue growth is mainly due to the company's continuous deepening of product innovation, improving product quality, and increasing market promotion. 24Q1 electric two-wheelers, robots, and all-terrain vehicle products all achieved rapid growth in sales.
Earnings exceeded expectations, and cash flow continued to grow. The 24Q1 company achieved a gross profit margin of 30.5%, +2.3 pct year on year, a net interest rate of 5.3% to mother, and +4.2 pct year on year. Profitability increased steadily. The No. 9 two-wheeler reversed losses in 23 years and achieved a net interest rate of 5%. The 24Q1 gross margin continued to improve by 2-3 pct year on year, and the net interest rate increased to 5.7%. The all-terrain vehicle and lawnmower robot's volume scale effect was evident. The gross margin was +3/4pct respectively, entering the profit stage simultaneously. Combined with the main business skateboards and balance scooters, the double-digit profit margin is expected to recover to around 7%. 1) Expense side: 24Q1 The company's period expense ratio was 23.1%, with sales/management/ R&D/finance expenses ratios of 10.7%/7.1%/6.4%/-1.0%, and +0.4/-1.2/-1.3/-2.2pct, respectively. The company continued to invest in R&D. The R&D investment ratio is expected to remain stable, and management expenses have paid off with the decline in scale effects; 2) Cash flow side: 24Q1: net cash flow from the company's operating activities of 940 million yuan (-0.2 billion yuan for the same period last year), mainly Q1 This is due to a sharp increase in revenue.
Investment advice: Since entering 24 years, the company's scooter and balance vehicle business has grown steadily. All new businesses have achieved rapid expansion. Profitability has benefited from structural improvements and significant improvements in scale effects. At present, an inflection point has been reached, and we have raised the company's profit forecast. We expect the company's net profit from 2024-2026 to be 10/15/2 billion, up 70%/46%/36% year-on-year respectively, corresponding to a valuation of 25/17/13 times, and upgraded to a “highly recommended” investment rating.
Risk warning: Domestic and foreign terminal demand falls short of expectations, product structure upgrades fall short of expectations, exchange rates and shipping costs fluctuate greatly, and market competition intensifies.