3Q23 performance is lower than we expected.
The company announced its results for the third quarter of 2023: 1-3Q23 realized revenue of 887 million yuan, down 20.02% from the same period last year, and net profit from its mother was 34 million yuan, down 37.54% from the same period last year, deducting 53 million yuan from non-parent net profit, down 49.28% from the same period last year. The inventory of overseas channels decays slowly, the income performance is lower than we expected; affected by the investment income and other factors, the profit performance is lower than we expected.
In each quarter, the company's 1Q/2Q/3Q23 realized revenue of RMB 3.51 million and 25.4% respectively, compared with the same period last year. The year-on-year loss of 3Q23 was reduced by-9.4%, 25.4%, respectively, and the net profit of 3Q23 was 0.23, 0.19, and 8 million yuan, respectively. 1Q/2Q23 was + 25.9%, 58.0%, and 3Q23, respectively.
Trend of development
Income is under pressure. The company's 1-3Q23 revenue fell 20.02% from the same period last year, of which 3Q23 revenue fell 26.45% from the same period last year. We believe that on the one hand, overseas inflation leads to weak terminal demand, and on the other hand, destocking through channels leads to obvious pressure on the company's export orders.
Gross profit margin continues the upward trend. The company's 1-3Q23 gross profit margin is 26.44%, year-on-year + 6.27ppt, of which 3Q23 gross profit margin increased from 6.18ppt to 28.36% compared with the same period last year. We believe that it is mainly due to the optimization of business structure brought about by the decline in sea freight and raw material prices and the increase in star canopy share. On the cost side, the expense rate for the company's 1-3Q23 period is 19.26%, year-on-year + 9.80ppt, sales / management + R & D / financial expense rate is 10.05% 11.47% mo 2.25%, year-on-year + 4.62ppt/+3.93ppt/+1.25ppt. Affected by the change of investment income and other factors, the net interest rate of 1-3Q23 is 3.82%, compared with the same period of last year-1.07ppt.
Keep an eye on the space of the new product. The company has a strong ability to create best-selling products, and the products continue to bring forth the new. in recent years, the company has launched star canopy products, which have better user experience, easier installation, higher performance and higher price, and rapid increase in product sales compared with wooden gallery racks and iron canopies. It has become the main driver of the company's performance growth in recent years, and we expect that the star canopy products are still expected to achieve relatively good performance in this year's pressurized export environment. Based on the extension of the category of star canopy products, the company will turn the activity space into products, create integrated products, and successively develop and launch matching products such as shutter doors and sunshade curtains, which we believe are expected to become the core driver of the company's performance growth in the future. In addition, the current overseas channel inventory continues to eliminate, we expect that next year as the channel inventory returns to the normal level, the company's performance is expected to return to the rapid growth channel.
Profit forecast and valuation
Due to the slow elimination of inventory in overseas channels, we have reduced the 2023 pound's 2024 income by 20% to 1.418 billion RMB respectively, taking into account the increase in expense rate and the change in investment income caused by the decline in income scale. The net profit of the parent company has been reduced by 50%, respectively, to RMB 0.54 billion, and the current share price corresponds to the price-to-earnings ratio of 45 in 2024, respectively. Maintain the outperform industry rating, adjust based on earnings forecasts, but consider the valuation switch, lowering the target price by 7% to 27.00 yuan, corresponding to a price-to-earnings ratio of 25 times earnings in 2024, which has 22% upward space compared with the current stock price.
Risk
Raw material prices fluctuate sharply; new product development falls short of expectations; international trade policy and exchange rate changes.