Key points of investment
Event: The company released the first quarter report of 2023. 2023Q1 achieved revenue of 175 million yuan, -8.52% year on year; net profit of 40 million yuan, +6.33% year on year; net profit of non-return mother was 34 million yuan, +7.42% year on year; gross margin was 47.70%, +3.37 pct year on year; net interest rate of homo was 22.87%, +3.20pct year on year; net interest rate after deduction of non-homo was 19.39%, +2.88pct year on year.
The decline in revenue narrowed in Q1, and the online growth rate was impressive. The real estate boom continued to recover in 23Q1, and the offline scenario fully recovered, driving a recovery in demand in the integrated stove industry. In 23Q1, the company achieved revenue of 175 million yuan, or -8.52% year on year, and the decline narrowed by 9.98 pct from month to month. Looking at each channel, the company's two-tier channel performance is divided. According to AVC, the 23Q1 company's online sales/sales volume of integrated stoves were +43.71%/+42.82%, respectively, and the market share of online sales was +2.73pct to 9.43% year-on-year. The company actively promoted the restructuring of online products and continued to increase investment in the operation of Tmall and JD platforms. The 23Q1 online channel growth rate led the industry significantly.
Cost improvement+cost optimization, Q1 profitability repair. The gross margin of 23Q1 was +3.37pct to 47.70% year-on-year, mainly due to lower raw material costs, optimization of business structures, and expansion of profit space. The 23Q1 sales/management/R&D/finance expense ratio was +3.64/-1.13/-4.31/+0.14pct to 15.99%/6.55%/3.55%/-3.63%, respectively. The increase in sales expense ratio was mainly due to increased marketing campaigns and a slowdown in revenue growth. Gross margin continued to improve, and the combined expense ratio declined year over year. In 23Q1, the company's net interest rate to parent was +3.20pct to 22.87% year on year.
Profit forecasting and ratings: As the recovery in real estate boosts demand and the post-pandemic consumer sentiment recovers, the company has accelerated its omni-channel expansion and multi-category expansion. It is expected that the company's operating performance will recover at an accelerated pace in Q2. We maintain our expectations. We expect EPS to be 1.37, 1.58, and 1.78 yuan respectively in 2023-2025, and the corresponding PE of the stock price on April 28 will be 12.3/10.7/9.4 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: The recovery in real estate sales fell short of expectations, raw material costs rose, and industry competition intensified.