Incident Overview

24H1: Revenue 6.976 billion yuan (YOY -2.35%), net profit due to mother 0.609 billion yuan (YOY +4.26%), net profit without deduction of 0.557 billion yuan (YOY +10.18%).

24Q2: Revenue of 3.502 billion yuan (YOY -10.39%), net profit to mother 0.311 billion yuan (YOY +20.67%), net profit of 0.271 billion yuan after deduction (YOY +23.07%).

The company released employee stock ownership plans, stock options and restricted stock incentive plans. The total capital of the employee shareholding plan is not more than 64.876 million yuan, with a purchase price of 20.20 yuan per share, unlocked in four phases. The target value for each unlocked point in 24-27 years was 4%/7%/10%/12% revenue growth over 23 years, and the trigger value was 2%/5%/8%/10%, and completed the trigger/target value unlocked 80%/100%; stock options and restricted stock incentive plans The equity grant is 25.0029 million shares, the stock option exercise price is 32.31 yuan/share, and the restricted stock grant price is 20.20 yuan/share, unlocked in four installments. The 24-27 performance assessment target is 2%/5%/8%/10% revenue growth over 23 years.

Analytical judgment

Revenue side: Divided into regions, overseas performance is significantly better than domestic performance. According to the announcement, the overseas business revenue of the 24H1 Covos brand increased 11.3% year on year. Among them, sales revenue in the European market increased by 42.0% year on year, and overseas revenue and sales volume of new categories of lawn mowers increased by 185.9% and 252.1%, respectively. The overseas business revenue of the 24H1 Tianke brand increased by 31.7% year on year. Among them, the US market share in the core market consolidated and expanded, and sales revenue in the European market increased significantly by 66.1% year on year. The domestic offline layout has been optimized. The Covos and Tianke brands have set up nearly 7,000 offline sales outlets across the country. The 24H1 Covos brand achieved sales revenue accounting for 33.5% of the domestic sales revenue of the Covos brand in the domestic offline market, and the Tianke brand achieved sales revenue in the domestic offline market accounting for 26.0% of the domestic sales revenue of the Tianke brand.

Profit side: 24H1 achieved gross sales margin of 49.12% (YOY+0.15pct), net profit margin of 8.73% (YOY+0.55pct); corresponding to Q2 sales gross margin of 51.05% (YoY+3.48pct), net profit margin of 8.89% (YOY+2.29pct). The sharp increase in gross margin was mainly due to an increase in the share of new product sales. According to the announcement, the 24H1 Covos brand accounted for 89.5% of revenue. From the perspective of shipment volume, the contribution rate of new products with a more competitive cost structure reached 54.2%. The increase in the share of new product sales led to an increase of 5.3 percentage points in the gross margin of the 24Q2 Covos brand over the same period last year.

Expense control efficiency was improved. 24H1's sales/management/R&D/finance expense rates were 29.27%/3.69%/6.39%/-0.30%, respectively, -2.87pct/-0.18pct/+0.93pct/+0.49pct; corresponding Q2 was 30.85%/4.01%/6.44%/-1.13%, respectively, -3.64pct/+0.78pct/+1.13pct, respectively.

Investment advice

We maintain our 24-26 revenue forecast of 16.982/18.582/20.069 billion yuan, +9.55%/+9.42%/+8.01% year-on-year, respectively. In terms of gross margin, it is estimated to be 49.50%/50.00%/50.00% for 24-26, respectively. The corresponding net profit for 24-26 was 1.439/1.687/1.844 billion yuan, respectively, +135.14%/+17.20%/+9.32% year-on-year, respectively. The corresponding EPS was 2.50/2.93/3.20 yuan respectively. Based on the closing price of 40.17 yuan on August 30, 24, the corresponding PE was 16.09/13.73/12.56 times, respectively, maintaining the “gain” rating.

Risk warning

Consumption recovery after the epidemic falls short of expectations; risk of price increases for raw materials; sales of new products fall short of expectations.