Events: The company released its 2023 three-quarter report. In the first three quarters of 2023, the company achieved operating income of 7.933 billion yuan, +9.62% year-on-year; realized net profit of 1,373 billion yuan, +11.3% year-on-year; and realized net profit of 1,233 billion yuan from net income deducted from the mother, +13.33% year-on-year.
Comment:
Revenue is growing steadily and market share is leading. According to Aowei Cloud Network, from January to September 2023, China's omnichannel retail sales of kitchen appliances were about +3.4% year-on-year. The company maintained a leading advantage and achieved growth superior to the industry since the beginning of the year. Looking at a single quarter, 2023Q2/Q3 companies achieved revenue of 2,758/2,998 billion yuan, +16.94%/+7.37% year-on-year; realized net profit of 4.41/543 billion yuan, +23.93%/+6.53% year-on-year, and the revenue growth rate of Q3 companies declined month-on-month. We believe it was mainly due to the weakening of the driving effect of insurance buildings in the third quarter and the slowdown in project-side revenue growth in the third quarter. By category, 1) Traditional categories maintained a leading position in the industry. According to Aowei Cloud Network, as of the end of the third quarter, the online market share of the boss brand range hoods/gas stoves was 24.2%/23.8%, and the offline market share was 30.4%/29.9%, all ranking first in the industry; 2) Increased new product launch, and emerging categories developed rapidly. At the end of the third quarter, the company's offline retail sales share of integrated stoves/dishwashers ranked first/rose to the top three respectively.
The company operates steadily and its profitability remains stable. The gross margin of 2023Q3 company was 52.19%, -0.07pct year-on-year and +2.51 pct month-on-month. The sales, management, R&D, and financial expenses of 2023Q3 companies were -0.20pct/+0.14pct/+0.22pct/+0.22pct/+0.96pct to 25.98%/4.11%/3.55%/-1.22%, respectively.
Under the overall influence, the net interest rate of 2023Q3 companies was 17.97%, -0.34pct year-on-year and +2.15pct month-on-month. The net interest rate level declined slightly compared to the same period last year, but increased month-on-month. Overall, the company's profitability is relatively stable.
Improved operating cash flow and increased operating capacity. The company's net operating cash flow in the first three quarters of 2023 was +18.46% year-on-year to 1,395 billion yuan. Driven by the Baojiao Building and the recovery in traditional retail traffic, the company's operating cash flow improved. At the end of the third quarter, the company's accounts receivable turnover days were -5.81 days to 58.99 days, the number of accounts payable turnover days was +6.85 days to 174.31 days, and the number of inventory turnover days was -18.36 days to 110.28 days year on year. The company's operating capacity increased during the period.
Investment advice: As a leader in the kitchen appliance industry, the company continues to expand its product matrix while deeply cultivating advantageous categories. It is expected that the number of dishwashers and integrated stoves will gradually be released in the future. However, considering the weakening momentum for subsequent real estate completion and delivery, we fine-tuned the company's profit forecast. It is estimated that the company's net profit from 2023-2025 will be 18.90/21.52/24.16 billion yuan (the original forecast value was 19.56/2233/2,491 billion yuan), corresponding to the current market value PE, 12/10/9 times, respectively, maintaining the “buy” rating.
Risk warning: Real estate policy regulation risks, consumption recovery falling short of expectations, fluctuations in raw material prices, etc.