Caitong Securities expects that Quanfeng Holdings (02285) will achieve a net income attributable to the parent company of USD 0.09/0.13/0.15 billion during 2024-2026.
According to the report released by Caitong Securities, it maintains a "shareholding" rating for Quanfeng Holdings (02285) and expects the company to achieve a revenue of USD 1.53/1.75/1.96 billion and a net income attributable to the parent company of USD 0.09/0.13/0.15 billion during 2024-2026. As the leading brand of lithium grass trimmer, the company will benefit from the replenishment of channels and is expected to benefit from the stimulation of mid-to-high-end consumption driven by interest rate cuts, with strong sustainability of performance recovery.
Event: The company released a positive profit forecast. The company expects a net profit of USD 60-65 million in the first half of 2024, a year-on-year increase of 22-33% (the net profit for the same period in 2023 was USD 49 million).
The main views of Caitong Securities are as follows:
The terminal demand of grass trimmer rebounds, and the shipment of channel companies grows strongly.
The company's revenue growth in the first half of the year is mainly expected to benefit from: 1) The favorable weather in North America in the spring of 2024 brings fast lawn growth and strong demand for grass trimmers; 2) The company's lithium grass trimmer brand EGO has outstanding industry influence and further promotes terminal sales through promotional activities; 3) Under the rebound of demand, the channel clears inventory more quickly and customer orders increase.
Under the dual benefits of internal and external factors, the company's profitability is expected to improve: 1) Benefiting from the increase in order volume, the company's production capacity utilization rate is expected to drive up the gross profit margin; 2) The company has optimized its operating expenses through internal balance and efficiency improvement; 3) On the external side, the cost of raw materials such as 24H1 exchange rates and upstream lithium batteries has improved year-on-year, bringing cost-side benefits.
24H1 performance exceeded expectations, and the full-year target is expected to be strengthened. The company's full-year business sales growth target is 15%-20%. Due to the optimization trend of profits, cash flow, and financial condition in 24H1, the company is confident that it will achieve its full-year target.
Risks: risks of fluctuation in marine transportation price, exchange rates, overseas consumption downturn, and significant fluctuations in Sino-US trade relations.
The company's full-year target for business sales growth is 15%-20%, and due to the optimization trend of profits, cash flow, and financial condition in 24H1, the company is confident in achieving its full-year target.
Risk Warning: risks of marine transportation price fluctuations, exchange rate fluctuations, sluggish overseas consumption, and significant fluctuations in Sino-US trade relations.