Huadong sales netted 240 million yuan a year

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Net profit of 240 million in 2024

Recently, Suzhou Oushen Electric Co., Ltd. (hereinafter referred to as Oushen Electric) released an announcement on its 2024 performance forecast. In 2024, Oushen Electric's net profit attributable to shareholders of listed companies is expected to reach 244 million yuan to 271 million yuan, a year-on-year increase of 40% to 55%. The net profit after deducting non-recurring gains and losses is 234 million yuan to 258 million yuan, a year-on-year increase of 45% to 60%.

Previously, some institutions predicted that the maximum net profit attributable to the parent company of this company in 2024 would be 275 million, a year-on-year increase of 57.35%; the median value was 246 million, a year-on-year increase of 40.39%; and the minimum value was 227 million, a year-on-year increase of 30.03%. The institutional forecast is not much different from the company's own forecast.

In 2024, the North American pneumatic tool market consumption will recover. The main customers of Oushen Electric will end the destocking process and deepen the cooperation model with the company, increasing the scale of purchases. At the same time, the company's development of non-North American markets such as Europe, Latin America, Australia, and the Middle East has achieved remarkable results.

In addition, the company relied on its own competitiveness to develop a large number of new product categories, which drove a significant increase in performance.

Currently, Oushen Electric has sufficient orders on hand. The company will continue to deploy its global production capacity in the future. It is expected that the company will continue to maintain a reasonable growth rate for some time to come.

In the first half of 2024, Oushen Electric achieved operating income of 739 million yuan, a year-on-year increase of 55.16%, and net profit attributable to shareholders of listed companies reached 97.1 million yuan, a year-on-year increase of 46.88%.

In the third quarter of 2024, Oushen Electric's total operating revenue continued to grow, reaching 567 million yuan, a year-on-year increase of 57.44%. In the first nine months, the company's total operating revenue reached 1.306 billion yuan, a year-on-year increase of 56.14%.

In the first nine months , the net profit attributable to the parent was 185 million yuan, a year-on-year increase of 47.96%. In the third quarter, it reached 87.4806 million yuan, a year-on-year increase of 49.19%.

The fourth quarter continued the good momentum of the first three quarters, and the company's net profit is expected to exceed 240 million in 2024.

Founded in Suzhou in 2009, Oushen Electric is a manufacturer of air power equipment and cleaning equipment. Its main products are small air compressors and wet and dry vacuum cleaners. Its products are mainly sold to overseas markets such as North America and Europe, with overseas sales revenue accounting for more than 99%. It will be listed on the Shenzhen Stock Exchange ChiNext on April 22, 2022.

Oushen Electric has in-depth cooperation with leading retailers in North America and has obtained authorization from international tool brands such as Stanley. It is currently the leader in the air compressor and wet and dry vacuum cleaner segments in North America. The company has established cooperative relationships with many world-renowned retailers, and its main customers include Lowe's, Home Depot, Amazon, Costco, Canadian Tire Corporation, Walmart, etc.

No. 1 in market share worldwide

In recent years, Oushen Electric has dominated the North American market with wet and dry vacuum cleaners and small air compressors, and is currently the leader in the air compressor and wet and dry vacuum cleaner categories in North America.

In the field of small air compressors, Oushen Electric ranks first in the global market share and is the top domestic exporter of small air compressors. It also holds a leading position in the wet and dry vacuum cleaner segment, with its main product revenue accounting for more than 80%.

Wet and dry vacuum cleaners have the dual functions of vacuuming and absorbing water, and are suitable for cleaning work in domestic and industrial environments. Small air compressors are characterized by small size and high efficiency, and are widely used in industrial and commercial fields.

Among the company's main businesses in the first half of 2024, the revenue from wet and dry vacuum cleaners was 380 million yuan, a year-on-year increase of 38.53%, accounting for 51.46% of the operating income; the revenue from small air compressors was 245 million yuan, a year-on-year increase of 72.40%, accounting for 33.22% of the operating income.

The gross profit margins of wet and dry vacuum cleaners and small air compressors were 38.80% and 28.57% respectively in the first half of 2024. The company has strong competitiveness and growth potential in the fields of small air compressors and wet and dry vacuum cleaners.

In recent years, the company has attempted to integrate the core technologies and production processes of small air compressors and wet and dry vacuum cleaners with the new product demands of the company's customer groups. Based on the above technologies and processes, the company has successfully developed new product categories such as nursing robots.

The company's small air compressor product sales are mainly based on ODM, and wet and dry vacuum cleaners are mainly sold through brand licensing models. The reason behind this is the different terminal competition landscape of the two categories. Generally speaking, the air compressor channel is stronger and the vacuum cleaner brand is stronger.

Comparing gross profit margins, the brand licensing model is higher because brand products are priced higher, trademark royalties need to be considered, and the DDP settlement method accounts for a higher proportion. When all costs are taken into account, the net profit margin of the ODM model is usually higher than that of the brand licensing model.

In 2023, the company's revenue from wet and dry vacuum cleaners and small air compressors accounted for 54% and 36% respectively. In 2023, the company's total revenue was 1.22 billion yuan, with a compound growth rate of 14% from 2018 to 2023, and a net profit attributable to the parent of 175 million yuan, with a net profit margin attributable to the parent of 14.4%, and a compound growth rate of 31% from 2018 to 2023. With the scale effect and product operation optimization, the company's profit growth rate is faster than its revenue.

Emphasis on R&D investment

Oushen Electric has profound technical accumulation in the field of small air compressors and wet and dry vacuum cleaners. It continuously improves product competitiveness by solving the core pain points of products. The company has always attached great importance to R&D investment and R&D team building, which not only ensures the continuous emergence of new products, but also guarantees the technical content and stable performance of new products.

From 2021 to 2023, the compound annual growth rate of R&D expenses reached 38.60%, and the proportion of R&D expenses to operating income also increased rapidly from 2.63% in 2021 to 5.53% in 2023. As of the end of 2023, it has 327 authorized valid patents, including 94 invention patents and 141 utility model patents.

In the first half of 2024, Oushen Electric's R&D expenses were 35.58 million yuan, a year-on-year increase of 20%. The company has mastered a variety of core technologies for the production and manufacturing of air compressors and wet and dry vacuum cleaners, including air compressor noise reduction technology, mechanical impact and external air recoil filter self-cleaning technology, and launches dozens of new products every year. Its independently developed ultra-quiet technology is the world leader.

Since 2024, Oushen Electric has increased its investment in R&D, and the reconstruction project of Oushen Electric R&D Center in Fenhu is about to be completed. With the commissioning of the new R&D center, not only will the R&D facilities be "upgraded", but the overall R&D level will also be greatly improved.

The improvement of R&D capabilities ensures that new products can be quickly launched into the market.

At the beginning of 2024, Oushen Electric began to develop snow throwers, which were fully launched in the third quarter. The entire development process took only 6 months. Since the product was launched on the market, customers have generally reported that the product has stable performance and reliable quality, and orders have also increased rapidly. In the third quarter alone, snow thrower sales exceeded 10 million yuan, accounting for 1.75% of the company's total revenue.

The company also launched tool products such as air pumps and pneumatic nail guns. The sales of air pumps alone reached tens of millions of yuan in the third quarter. At the same time, the company's nursing robot business is also accelerating and is expected to achieve volume growth. In 2023, the company's listed floor scrubbers also entered a rapid growth stage, with sales rising sharply.

In recent years, Oushen Electric has launched new products independently developed every year, which is an important force to support the high growth of performance. With the increasing variety of product lines, Oushen Electric's revenue and profits are expected to continue to grow.

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Net Profit