Non-return deductions increased 46% in the first quarter of 2024. 24Q1 achieved revenue of 80 billion yuan, an increase of 14.83% year on year, net profit of 77.92 million yuan, increase of 45.25% year on year, net profit after deduction of 75.25% year on year, net profit margin of 75.23 million yuan year on year, gross profit margin of 37.93% year on year, increase of 2.04 pct year on year, net profit margin of 9.40% year on year, increase of 2.01 pct year on year.
Gross margin increased, and profitability continued to improve. The 24Q1 company's gross margin increased slightly by 0.23 pct. Historically, the first quarter revenue accounted for about 18% of the whole year. We believe that the gross margin increase was achieved in the quarter with low capacity utilization or related to production improvement. The 2023 annual report showed a year-on-year increase of 66.81%, an increase of 3.51 pct over the previous year. The trend of increasing the company's capacity utilization rate may continue, and the scale effect continues. The 24Q1 sales/management/ R&D/ finance expenses ratio was 9.5%/13.0%/4.5%/-0.4%, respectively. A decrease of 2.30pct, of which the first three items combined increased by 0.55pct over the same period last year. Changes in the financial expense ratio mainly drove the improvement in the cost ratio. Considering that exchange gains and losses have fluctuated greatly in history, we estimate that financial expenses for the first quarter may generate exchange income.
Overall, the company's production is stable, gross margin has increased, and profitability has steadily increased.
Maintain flexible production to provide customers with fast, high-quality product support. The company aims to be a smart factory, and takes digital transformation as an opportunity to fully implement production standardization, equipment intelligence, and management data, and create a platform for industrial collaboration. The level of digital intelligence manufacturing is world-leading. Efficient and flexible intelligent manufacturing can better interact with the upstream and downstream of the industry chain to provide fast and high-quality product support for branded clothing and apparel companies.
The company insists on transformation and upgrading, input and output, and focuses on globalization and digital intelligent manufacturing. Faced with the complex macroeconomic environment and economic situation, the company has always insisted on “sustainable development” as the core, closely adhering to the two main lines of “transformation and upgrading” and “input-output”, continuously increasing customer development and intelligent manufacturing, strengthening product leadership and organizational security, accelerating the deepening of global layout, promoting strategic transformation and implementation, continuously improving overall competitiveness, and achieving steady operation of the company in the face of industry downturn. Accelerate the construction of industrial parks in Vietnam, improve the management efficiency of industrial parks in Bangladesh, and provide a strong guarantee for international market expansion.
Accelerate the transformation of high-end intelligent manufacturing, continuously improve the level of production management, accelerate the implementation of “digital intelligence” manufacturing strategies, promote the transformation and upgrading of site management and manufacturing, and achieve both improvements in efficiency and efficiency per capita.
Profit forecasting and valuation. We expect revenue forecasts for 2024-2026 to be 43.7, 4.96 billion yuan, and 5.81 billion yuan, respectively, and net profit forecasts to mother of 6.11, 6.79, and 803 million yuan, respectively. The company will be given a 20-25 XPE in 2024, corresponding to a reasonable value range of 10.44-13.05 yuan, maintaining a “superior to the market” rating.
Risk warning. There is a risk of loss of orders, and capacity expansion falls short of expectations.