Event: On August 29, 2023, Ojiahua released its 2023 semi-annual report. 2023H1 achieved total revenue of 2,344 million yuan (-25.65%), net profit of 42 million yuan (+215.83%), net profit of non-attributable net profit of 17 million yuan (+5.86%); 2023Q2 achieved total revenue of 1,161 million yuan (-26.01%), net profit of 0.3 million yuan (+260.89%), net profit of 0.3 million yuan (+260.89%), net profit of non-attributable net profit of 0.23 million yuan (-33.32%).
Domestic sales of 2023H1 achieved double-digit growth, and all product lines were under pressure due to insufficient overseas demand. 1) By product, 2023H1 massage healthcare/health environment/other businesses achieved revenue of 1,701/278/304 million yuan, year-on-year respectively, -2,481/-43.25/ -7.81%, respectively. Among them, massage chairs and massage appliances in massage and health care achieved revenue of 1,086 million yuan (-19.77%) and 615 million yuan (-32.31%), respectively. All products are under pressure, mainly due to a sharp decline in export sales revenue; 2) By region, 2023H1 achieved revenue of 791 million yuan, respectively At yuan (+15.51%) and 1,492 billion yuan (-37.76%), domestic sales achieved double-digit growth. The sharp decline in export revenue was mainly due to factors such as high overseas inflation, and insufficient consumer demand for non-essential consumer goods such as health and massage. The overseas health and massage consumer market in many parts of the country is still at the bottom of exploration.
2023Q2 performance resumed growth, and gross net profit margin both increased. 1) Performance side: 2023Q2 Company achieved net profit of 23 million yuan (+260.89%), and single-quarter performance resumed growth; 2) Gross profit margin: 2023Q2 gross margin was 36.19% (+6.38 pct), 2023H1 massage healthcare/health environment/domestic sales/export gross margin increased by 6.21/8.14/8.61/9.06pct respectively. Gross margin of all products and regions increased dramatically. Mainly or related to product structure optimization, raw material and shipping price reduction, exchange rate positive contribution, and multi-faceted optimization of production management details Driven by factors such as quality and efficiency; 3) Net interest rate: 2023Q2 net interest rate was 2.61% (+3.32pct), and the increase was less than gross margin mainly due to factors such as increased sales cost investment and increased asset impairment losses; 4) Expense side: 2023Q2 sales/management/R&D/financial expense ratios were 22.74/8.13/4.64/ -5.59%, respectively, +4.76/+1.59/+0.11/-1.84pct, respectively. Financial expenses were optimized or increased mainly due to increased exchange revenue. It may be due to an increase in e-commerce operating expenses. 2023H1 e-commerce operating expenses invested +87.96% year-on-year. The company's domestic and foreign e-commerce channel layout continues to improve, and we are optimistic about subsequent online channel performance.
The share of independent brands in business continues to increase, and technological innovation continues to advance. 1) In terms of independent brands:
The 2023H1 independent brand already accounts for more than 50% of revenue, the market position and influence of the company's own brands continues to increase, and the global layout of independent brands has achieved remarkable results; 2) In terms of technological innovation, 2023H1 has completed the next-generation smart movement technology plan and entered the flagship product finalization stage. It will introduce new products with new technology to the market in due course, apply new products with new technology, or drive the company's revenue growth and profitability.
Investment suggestions: On the industry side, affected by the macroeconomy, global economic growth momentum is insufficient, consumer demand is weak, demand in the massage equipment industry is slowing down, and industry competition has intensified, but public health awareness at home and abroad has increased. As consumption picks up, market demand for massage chairs and small massage appliances may continue to grow, and the industry penetration rate is expected to gradually increase. At the same time, as barriers such as technology, standards and brands in the industry increase, market share may be concentrated towards industry leaders with deep accumulation. On the company side, the company is a leader in the massage equipment industry. It continuously adjusts and optimizes its business structure, focuses on the main health and massage business, has outstanding advantages in technology, product, scale, etc., and continuously strengthens its own brand product innovation, brand marketing and channel construction. The global layout of independent brands has achieved remarkable results. As consumption picks up, revenue is expected to resume growth and drive performance improvement. We expect the company's net profit to be 1.09/211/234 million yuan in 2023-2025, the corresponding EPS of 0.18/0.34/0.37 yuan, respectively, and the corresponding PE at the current stock price of 44.87/23.26/20.99 times, respectively. Covered for the first time, giving it a “recommended” rating.
Risk warning: macroeconomic fluctuations, fluctuations in raw materials and shipping prices, exchange rate fluctuations, increased market competition, etc.