The company disclosed its third quarterly report: in the first three quarters of 2023, the company realized operating income of 1.298 billion yuan, down 16.91% from the same period last year, realized net profit of 152 million yuan, an increase of 20.74% over the same period last year, and realized non-net profit of 134 million yuan, up 22.28% from the same period last year.
In the third quarter alone, the company realized operating income of 408 million yuan, down 11.44% from the same period last year, realized net profit of 46.8163 million yuan, up 19.13% over the same period last year, and realized non-net profit of 38.608 million yuan, an increase of 29.38% over the same period last year.
Event comment
Demand is still recovering and the income side is still declining, and the increase in gross profit margin plus cost optimization deduction of non-net profit has achieved relatively rapid growth. The company realized a 16.91% year-on-year decline in operating revenue in the first three quarters, with Q1/Q2/Q3 down 31.71%, 6.03% and 11.44%, respectively. Revenue still fell in the third quarter, or mainly because current consumers are still rational and cautious, domestic consumption is still in the process of recovery, overseas orders still decline compared with the same period last year, or we may need to see the replenishment of orders from November to December. On this basis, the company's gross profit margin in the third quarter increased by 5.63% to 32.95% compared with the same period last year, which may be related to the optimization of raw material cost and the company's product structure. At the same time, the sales expense rate in the third quarter increased by 0.78% compared with the same period last year. The amount of sales expenses remained relatively stable, mainly due to the impact of the decline in revenue, and the rate of management expenses decreased by 1.52% compared with the same period last year. The internal operating expenses are well controlled, the R & D expense rate is 0.15% higher than the same period last year, and the financial expense rate is 3.96% higher than the same period last year, or mainly due to the decrease in foreign exchange earnings, the company's operating profit (gross profit-sales expenses-management expenses-R & D expenses-financial expenses-operating tax and additional) in the third quarter was 41.6228 million yuan, an increase of 8.64% over the same period last year. Operating profit margin increased by 1.88 percentage points compared with the same period last year. On this basis, taking into account the reversal of credit impairment losses and the reduction of comprehensive income tax rate, the company's non-net profit increased by 29.38% in the third quarter alone.
The company continues to launch new products, and actively expand and optimize the channel system and expand overseas markets, is expected to usher in a rebound in growth. The company has "Rongtai" and "Moda" brands, "Rongtai" brand focuses on middle and high-end massage chairs, "Moda" is mainly aimed at entry-level mid-and low-end products, in order to better meet the multi-level needs of consumers, on this basis, the company actively explores new product development, in order to better meet the pain points of user needs, launched a series of S80 and other new massage chairs to meet the differentiated needs of family users. At the same time, the company actively optimizes the channel layout, with more than 1000 offline stores in China, and online stores on major e-commerce platforms such as Tmall, JD.com, SUNING, Mijia and Douyin, and the company continues to actively expand street-facing monopoly stores. brand exposure and product sales in a more efficient form. In addition, the company has expanded South Korea, North America, Europe and other markets. In order to better promote order growth, the company timely adjusts its product strategy and launches new products at different prices to meet the different needs of different markets. At the same time, it will formulate positive sales policies to stimulate the enthusiasm of overseas customers and drive the growth of orders. Under the promotion of the company's active products and sales strategy, the company's sales are expected to stabilize and pick up.
Investment suggestion: as the leader in the domestic massage chair market and an important manufacturer of the global massage chair, the company has a dominant position in the industry, and the company has accumulated a perfect massage chair research and development, industrial design and quality control system. The domestic market already has a good brand cognitive foundation, and the cooperation foundation of overseas major customers is stable and is expected to drive new customer growth, thus stabilizing with the gradual pick-up of demand. The company is expected to usher in a relatively rapid recovery of growth. It is estimated that the company's net profit from 2023 to 2025 will be 2.07,2.44 and 289 million yuan respectively, corresponding to 13.72,11.65 and 9.84 times PE, maintaining a "buy" rating.
Risk hint
1. The slow pace of demand recovery caused by the fluctuation of economic situation
2. Income adjustment brought about by the fluctuation of major customers' orders.