ECOVACS(SH:603486) Southwest Securities·2024-05-09 07:30Investment Rating - The report maintains a "Buy" rating for the company with a target price of 61.02 CNY over the next six months [1][11]. Core Views - The company reported a revenue of 15.5 billion CNY in 2023, a year-on-year increase of 1.2%, but a significant decline in net profit by 64% to 610 million CNY. The first quarter of 2024 showed a revenue increase of 7.4% year-on-year, but net profit decreased by 8.7% [2][3]. - The company is focusing on expanding its offline channels both domestically and internationally, with a notable increase in sales points for its brands [2][3]. - The competitive landscape has pressured the company's gross margin, which decreased by 4.1 percentage points to 47.5% in 2023, primarily due to increased competition and rising material costs [2][3]. - The company is expected to return to a growth trajectory in 2024, driven by its strong market position in the cleaning appliance sector and ongoing channel reforms [2][11]. Summary by Sections Financial Performance - In 2023, the company achieved a revenue of 15.5 billion CNY, with a net profit of 610 million CNY, reflecting a 64% decline. The first quarter of 2024 saw a revenue of 3.47 billion CNY, up 7.4% year-on-year, while net profit was 300 million CNY, down 8.7% [2][3]. - The company’s gross margin for 2023 was 47.5%, down from the previous year, with a further decline to 47.2% in Q1 2024 [2][3]. Product and Market Analysis - The company’s revenue from service robots, smart home appliances, and other products in 2023 was 7.74 billion CNY, 7.66 billion CNY, and 100 million CNY, respectively. The growth was primarily driven by the "TianKe" brand [2][3]. - The company has established over 2,500 sales points for its main brand and nearly 800 for the "TianKe" brand, with significant international expansion into retail channels like Target in the U.S. [2][3]. Profitability and Forecast - The report forecasts EPS for 2024, 2025, and 2026 to be 2.26 CNY, 2.69 CNY, and 3.31 CNY, respectively, with a projected PE ratio of 27 for 2024 [2][3][11]. - The company is expected to maintain a strong market position in the cleaning appliance sector, with anticipated improvements in profitability as sales expenses are controlled [2][11].