Incident: The company released its 23 annual report and its quarterly report for '24. It achieved revenue of 50.98 billion yuan and 1,345 billion yuan, with year-on-year changes of -9.75% and +0.87%; realized net profit of 4.64 billion yuan and 140 million yuan, up 11.67% and 89.09% year-on-year, achieving net profit without deduction of 3.84 and 115 million yuan, year-on-year changes of -3.30% and +57.26%, with basic earnings per share of 0.88 and 0.27 yuan.
Domestic sales volume declined significantly in 23 years, and the 24Q1 revenue growth rate recovered: 4Q23/1Q24 achieved operating income of 9.99/1,345 million yuan, a year-on-year change of -14.44%/+0.87%, achieving net profit of 0.54 to 140 million yuan. 1Q24 revenue growth rate recovered year-on-year, and profit margin rebounded sharply from month to month. In '23, the company sold 389,400 motorcycles, with a slight increase over the previous year. Among them, sales of high-displacement motorcycles of 250 cc and above were 137,700 units, down 22.7% year on year. Affected by changes in the consumption situation, domestic sales volume fell 28.3% year on year to 88,700 units, and exported 50,900 units, down about 11% year on year.
The gross margin of the export business improved, and the net profit margin increased: in '23, the company's gross profit margin was 27.51%, up 0.36 pct year on year, the share of export revenue increased 4.72 pct to 40.52%, and domestic/export gross margin changed by -1.49/+3.63 pct to 27.32%/27.79% year on year, respectively. In terms of the cost ratio for the period, the sales expense ratio increased 0.75 pct to 4.28% year on year, the management expense ratio increased 0.55 pct to 5.44% year on year, the R&D expense ratio increased 0.76 pct to 6.36% year on year, and the financial expense ratio decreased 0.33 pct to -3.65% year on year. Under the combined influence, the company's net interest rate increased 1.91 pct to 8.94% year on year.
Promote the construction of independent foreign trade channels and promote the number one strategy of internationalization: in 2023, the company opened up more than 20 new markets and established more than 30 channels for importers. The revenue from independent foreign trade (not exported through a third party) increased 200% year on year, accounting for 29%. In 24, the company will use internationalization as the number one strategy, focus on European, American, Latin American, Middle Eastern and African markets in terms of channels, deeply enter the market and improve product layout, open up empty markets, and establish independent sales channels in key markets such as the US and Indonesia. Through continuous promotion of self-built websites and social media platforms, events and investment in various exhibitions, the company will enhance the brand's international popularity, expand off-road vehicles, all-terrain vehicles, and expand overseas categories.
Profit forecast and rating: We expect the company's net profit for 24-25 to be 6.04 billion yuan and 724 million yuan respectively, with year-on-year growth rates of 30.1% and 19.9%. The closing price on May 15 corresponds to the 24-25 PE of 15.6 and 13.0 times. Refer to the comparable company giving the company a PE valuation of 20 to 22 times in 24 years, corresponding to a reasonable value range of 23.00 to 25.30 yuan, giving a “superior to the market” rating.
Risk warning: The cost of raw materials fluctuates greatly, and downstream demand is weak.