The company released the 2024 three-quarter report

In the first three quarters of 2024, the company achieved revenue of 1.61 billion yuan, -4.3% year-on-year, and realized net profit of 0.2 billion yuan, or +91.9% year-on-year. Looking at the 3rd quarter alone, the company achieved revenue of 0.53 billion yuan, -12.3% year-on-month, and -9.6% month-on-month; realized net profit to mother 0.055 billion yuan, +70.8% year-on-year, and -35.9% month-on-month.

Profitability increased significantly year over year

In the first three quarters of 2024, the company's comprehensive gross margin was 24.2%, +6.1pp year on year, and the period expense ratio was 12.2%, +1.8pp year on year; net interest rate was 12.5%, +5.8pp year on year. In the 3rd quarter of a single quarter, the company's comprehensive gross margin was 24.6%, +5.4pp, the same month-on-month; the fee ratio for the period was 15.8%, +4.1pp, and +5.5pp month-on-month; in Q3, the company's net interest rate was 10.4%, +3.9pp year-on-month, and -4.1pp.

Focus on the main power tool business and gradually start production at overseas bases

The company focuses on the main profitable business - power tool accessories and battery pack business. According to the company's 2024 mid-year report, power tool accessories revenue was +33.7% YoY, battery pack and charger revenue +48.8% YoY, high-end equipment revenue +14.8% YoY, and NEV power exchange station revenue -75.4% YoY. The company implemented a strategic layout with “Weihai, China as the core, with Vietnam and Mexico bases as two wings” to effectively reduce production costs and avoid geopolitical risks. In the first half of 2024, the Vietnamese subsidiary achieved sales revenue of 52.05 million yuan, +85.1% over the same period, increasing the number of products sold to 197; the Mexican subsidiary is under active construction.

Investment advice

Referring to the latest performance report, we lowered our 24-26 revenue forecast of 2.22/2.53/2.89 billion yuan to 2.2/2.86 billion yuan, and lowered the 24-26 EPS 0.60/0.70/0.82 yuan forecast to 0.58/0.69/0.80 yuan, corresponding to the closing price of 9.27 yuan on October 29, 2024. The valuation was 16/13/12 times, respectively, to maintain the “gain” rating.

Risk warning

The risk of macroeconomic fluctuations, the risk of exports falling short of expectations, the risk of fluctuations in raw material prices, and increased risk of industry competition.