Items:
The company released its third quarterly report for 2023, 2
3Q1-Q3 achieved a total operating income of 4.43 billion yuan, + 4.0% year-on-year, and a net profit of 360 million yuan, + 28.2% over the same period last year. In a single quarter, 23Q3 achieved a total operating income of 1.55 billion yuan, + 6.6% compared with the same period last year, and a net profit of 100 million yuan, + 151.6% over the same period last year.
Comments:
The income outperformed the industry, and the results of the reform showed. The kitchen and electricity industry as a whole shows a weak recovery. According to the total data of Oweitsu, retail sales of 23Q3 kitchen and bathroom rigid demand categories (tobacco, stove, heating, electric heating) are + 3% year-on-year, and retail volume is-2% year-on-year. Huadi outperformed the industry as a whole. In addition, the company pays attention to improving the quality of online operations and traffic conversion rate, gradually increasing the proportion of middle and high-end products; on the other hand, accelerating the development of sinking channels to cover the customer base of low-line cities, and according to the company disclosed that revenue from sinking channels doubled in the first half of the year.
Profit growth is eye-catching, profitability is repaired. 23Q3's homing net profit was + 151.6% compared with the same period last year, which achieved outstanding performance on the basis of a low base in the same period last year. In terms of profitability, the company's 23Q3 gross profit margin is 42.6%, an increase of 2.6pct over the same period last year, or it may mainly benefit from the optimization of product structure, the increase of incremental channel gross margin and the decline of raw material prices. In terms of expenses, the sales / management / R & D / financial expense rates of 23Q3 are 25.4%, 4.5%, 3.5% and 0.1%, respectively, compared with the same period last year, respectively-4.0/+0.4/-1.6/+0.3pct, in which the efficiency of sales expenses is greatly improved. In addition, the impairment of 23Q3 totaled 43 million yuan, which was a drag on profits. Under the comprehensive influence, the company's 23Q3 return net interest rate is 6.4%, compared with the same period last year + 3.7pct, and the profitability has improved significantly.
Brand channel reshaping, looking forward to long-term development. The company's diversified categories and channel layout are complete, and under the overall pressure of the kitchen and electricity industry, it is expected to maintain market share expansion and steady growth. According to Ovi data, the cumulative online and offline retail sales of Huadi-branded lampblack machines from January to September in 23 years were 11.5% and 6.7% respectively, up from the same period last year.
In recent years, Huadi attaches importance to the upgrading of brand image and the improvement of omni-channel management ability. with the increase in the proportion of domestic consumption environment repair and superimposed kitchen electricity renewal demand, the company's pre-strategic adjustment is expected to be realized gradually. In terms of brand building, the company maintains a multi-level and cross-domain brand matrix, and the three major brand strategies of "Hua Di", "Baide" and "Hua Di Home" complement each other. We are optimistic about the long-term development of the company.
Investment suggestion: we maintain the company's annual EPS forecast of 0.59, 0.65, 0.71 yuan in 23-24-25, and the corresponding PE is respectively times that of 10-9-8. With reference to the absolute valuation method, the company's target price is maintained at 8.2 yuan, corresponding to 14 times PE in 23 years, and the "recommended" rating is maintained.
Risk tips: a sharp decline in real estate data, increased competition in the industry, and sharp fluctuations in raw material prices.