Key points of investment:
Domestic share of two-wheelers has increased, and export sales have soared
Chunfeng Power has taken the lead in targeting and entering the field of recreational motorcycles to seek differentiated development paths. Years of market segmentation have enabled the company to have industry-leading consumer insight, product design capabilities that better meet the needs of young users, and stable quality control capabilities, and then continue to export popular products such as the 250SR, 450SR, and XO Baboon, taking the lead in domestic market education for high-displacement motorcycles, gradually increasing the reputation of domestic brands in the middle and high-end high-displacement fields, so that users and the market can see the possibility of domestic alternatives. In recent years, the company has actively expanded its two-wheeler export business. Channel expansion and new product launches have made joint efforts. Exports have continued to achieve high growth and continue to advance towards a world-class Chinese brand.
The all-terrain vehicle construction basic market, structural optimization drives profits and improves the all-terrain vehicle business to build the company's basic market. The company's all-terrain vehicles are mainly sold to Europe and America. Relying on supply chain advantages during the pandemic, the company rapidly increased its market share. In 2023, the company's all-terrain vehicle exports accounted for 70.79% of domestic exports of similar products, and remained in the leading position; the US market is growing strongly, distribution outlets continue to expand, and Europe steadily ranks first in market share. Compared with overseas brands, the company's all-terrain vehicle products have a strong cost performance ratio, and it is expected to continue to seize share in the context of the downturn in overseas economies. At the same time, the company is actively optimizing the all-terrain vehicle product structure and focusing on the layout of new U/Z series products, which is expected to drive continuous improvement in the gross margin of all-terrain vehicles.
Steady progress, and performance continues to exceed expectations
In 2023, the company achieved revenue of 12.11 billion yuan, +6% year-on-year, net profit of 1.01 billion yuan, +44% year-on-year, after deducting non-net profit of 970 million yuan, +22% year-on-year. 24Q1 achieved revenue of 3.06 billion yuan, +6% year-on-year, net profit of 280 million yuan, +32% year-on-year, after deducting non-net profit of 270 million yuan, +39% year-on-year. In terms of four-wheelers, revenue for 23 years was 6.5 billion yuan, -5% year-on-year, sales volume was 146,500 units, with an average price of 44,400 yuan, and an average price of 44,400 yuan, +8% year-on-year; the 23Q4 and 24Q1 wheels went overseas, and the revenue side was under pressure. Inventory ended or came to an end at the end of Q1, and the company's four-wheelers are expected to improve in the future. In terms of two-wheelers, revenue in 2008 was 4.5 billion yuan, +33% year over year, sales volume was 197,000 units, +36% year over year, and average price was 22,700 yuan, or -2% year over year. Among them, two rounds of domestic sales were 2.2 billion yuan, +5% year-on-year; domestic sales volume was 99,000 units, +8.6% year over year; two rounds of exports were 2.3 billion yuan, +78% year over year, and export volume was 98,000 units, +81% year over year. The two rounds of domestic sales were steady, and export sales continued to be strong.
Profit forecasting and investment advice
The estimated net profit for 2024-2026 will be $12.27, 1,477, and 1,724 million yuan, +22%, +20%, and +17%. The corresponding EPS is 8.10, 9.75, and 11.39 yuan, and the corresponding PE for 2024-2026 is 19x, 16x, and 14x, respectively. The company has industry-leading consumer insight, product design capabilities and brand marketing capabilities. Domestic high-displacement motorcycles continue to be popular, and all-terrain vehicles and two-wheelers all have a first-mover advantage when going overseas, and it is expected that it will continue to improve competitiveness on a global scale. First coverage, giving a “buy” rating.
Risk warning
Macroeconomic fluctuations, adverse changes in trade policies, changes in exchange rates, intensification of market competition