FLYCO(SH:603868) KAIYUAN SECURITIES·2024-05-04 15:00Investment Rating - The investment rating for the company is "Buy" (maintained) [2][11]. Core Views - The company's performance in Q1 2024 is under pressure due to holiday sales timing and increased expenses, but the gross margin continues to show an upward trend [2][3][4]. - The company is focusing on structural upgrades and the contribution from the Borui brand for long-term growth [2]. Financial Performance Summary - In Q1 2024, the company reported a revenue decline of 43.78% year-on-year, with a net profit attributable to the parent company of 1.8 billion yuan, down 40.77% [2][3]. - The gross margin for Q1 2024 was 57.1%, an increase of 1.02 percentage points, attributed to the improvement in the Borui brand's gross margin and the upgrade of the Feike brand's product line [4]. - The company’s net profit margin for Q1 2024 was 15.33%, a decrease of 7.98 percentage points, while the net profit margin after deducting non-recurring items was 14.09%, down 6.25 percentage points [4]. Revenue and Profit Forecast - The company expects revenues to grow from 5,606 million yuan in 2024E to 7,215 million yuan in 2026E, reflecting a compound annual growth rate (CAGR) of approximately 13.9% [5]. - The net profit attributable to the parent company is projected to increase from 1,111 million yuan in 2024E to 1,404 million yuan in 2026E, with a CAGR of about 14.1% [5]. Valuation Metrics - The projected earnings per share (EPS) for 2024E is 2.55 yuan, increasing to 3.22 yuan by 2026E [5]. - The price-to-earnings (P/E) ratio is expected to decrease from 18.2 in 2024E to 14.4 in 2026E, indicating a more attractive valuation over time [5].