23Q3 revenue increased by 27.2%, net profit decreased by 6.2%
23Q1-3 revenue was $2.39 billion, a year-on-year increase of 13%. 23Q1, Q2, and Q3 revenue and year-on-year growth rates were 700 million (-6.4% yoy), 8.3 billion (+19.9% yoy), and 860 million (+27.2% yoy), respectively; 23Q1-3 net profit was 190 million yuan, up 11.9% from the same period. Net profit and year-on-year growth rates for 23Q1, Q2, and Q3 were $24 million (-57.4% yoy), 98 million (+136.1% yoy), and 65 million (-6.2% yoy); 23Q1-3 deducted non-return net profit of 220 million, same increase of 4.1%; 23Q1, Q2, and Q3 net profit and year-on-year growth rates were respectively 100 million (-84.1% yoy), 0.92 billion (+44.3% yoy), and 116 million (+36.6% yoy), Q3 Non-return net profit growth is mainly due to This is due to an increase in sales revenue and an increase in gross sales margin.
23Q1-3 orders remained stable. Compared with the same period last year, there was a significant recovery in orders.
Currently, the company's products are mainly smart electric beds, while its main sales are still concentrated in the US market. Products sold to the North American market accounted for more than 85% of sales. Although sales in the domestic market increased significantly in '23, due to the small base, they accounted for less than 10% of the company's overall sales.
23Q1-3 US market orders maintained a growth rate of around 10% compared to the same period last year; thanks to the opening of offline stores under the “Schuford” brand and the initial brand benefits of the “Schuford” brand, the domestic market order situation increased markedly, with a growth rate of over 50%; the international market Q1-3 performed well, with the European market growing at a rate of over 70%.
The gross profit ratio of 23Q1-3 increased by 35.09% by 3.81 pct, net profit margin of 7.77% and minus 0.04pctQ3 gross profit margin of 38.01%, same increase of 8.46pct. The main system is (1) the company's current main sales concentration is in the North American market. The exchange rate of the Q3 US dollar remains high against the RMB, and exchange earnings will affect the gross profit margin to a certain extent; (2) Q2 freight rates are on an upward trend, and Q3 has declined, reducing the company's transportation costs; (3) The price of raw materials remains within a relatively stable price range, which is conducive to controlling the company's costs (4) Due to the optimization of the structure, customers have increased the proportion of purchases of high-margin products.
The 23Q1-3 sales expense ratio was 11.9%, an increase of 2.33 pct, mainly due to an increase in domestic marketing expenses; the management expense ratio (including the R&D cost rate) was 14.1%, a decrease of 2.41 pct; and the financial expense ratio was -2.03%, an increase of 4.28 pct. Accounts receivable also increased by 98.8%, mainly due to improved orders and increased sales.
Production capacity is not yet saturated, and the Mexican plant helps develop the North American market
The company's current capacity utilization rate is not saturated. In addition to the smart factories established domestically, the company has factories in Vietnam and Mexico. The current order level is relatively stable, and production is being carried out in an orderly manner at each factory.
The Vietnamese factory has an annual assembly production capacity of 600,000 sheets, and currently has a production capacity of 500,000 sheets per year; the Mexican factory is designed to produce 500,000 sheets per year. Due to regional differences and cultural differences, the production capacity of the Mexican factory has not yet been fully released, and in the future, production capacity will be further increased according to the order situation.
The parts required for the Vietnamese and Mexican factories still need to be exported domestically. Domestic parts are produced at the new plant, with an annual production capacity of 2 million sets of parts.
Mexico is geographically close to the US. For US customers, the company's production in Mexico can shorten the customer's supply chain, carry out a more stable supply of goods, and at the same time avoid tariffs, reduce costs, respond more flexibly to changes in international policies, respond more quickly to customers, and facilitate the company's development of a new small to medium customer base.
Actively lay out the domestic market and promote the construction of offline stores
After the company has attracted traffic in some cities through various exhibitions (including various furniture fairs, wedding fairs, etc.), it will later open stores in the corresponding cities and adopt a strategy of online and offline sales cooperation to explore the domestic market. After the offline experience, consumers can make purchases through various online or offline channels. Up to now, the company has opened more than 60 stores in furniture stores and commercial complexes in Tier 1 and 2 cities including Beijing, Shanghai, Guangzhou, Hangzhou, Suzhou, Hefei, and Xi'an. The company plans to open more than 100 stores in China this year.
In addition to offline direct management and distribution stores, through cooperation, the company allows smart beds to be piloted in more application scenarios, such as hotels, nursing homes, and confinement clubs. After the product is sold, the company's follow-up sleep service can increase consumer stickiness.
Adjust profit forecasts and maintain the “increase in holdings” rating
The company has been working intensively in the field of smart electric beds for many years. Since its establishment, the company has focused on the field of smart electric beds. With its advantages in market research, R&D and design, large-scale production, quality management, sales channels, after-sales service, etc., it has been recognized by high-quality customers such as large mattress vendors and large home furnishing retailers in terms of product design, function and quality. Currently, the company has a relatively stable market share in overseas markets. The profit forecast was adjusted to take into account the company's performance (23Q3 revenue increased by 27.2%, net profit decreased by 6.2%). We expect the net profit of 23-25 companies to be 233/2.69/315 million yuan respectively (previous value was 2.42/2.83/327 million yuan), EPS is 0.65/0.75/0.88 yuan/share, and PE is 18/15/13x, respectively.
Risk warning: market competition, customer concentration, fluctuations in international market demand, exchange rate fluctuations, international trade policy, changes in the international trade environment, fluctuations in raw material prices, damage to brand image and risk of knowledge infringement, etc.