Event: Gold Medal Kitchen released its 2023 three-quarter report. In 23Q1-3, the company achieved operating income of 2,547 billion yuan, an increase of 2.35% over the previous year; net profit of 166 million yuan, an increase of 1.04% over the previous year; net profit after deducting net profit of 109 million yuan, an increase of 13.90% over the previous year. Among them, 23Q3 achieved operating income of 1,041 million yuan, a year-on-year decrease of 1.62%; net profit of 90 million yuan, an increase of 24.79% over the previous year; and net profit after deducting non-return to the mother's net profit of 66 million yuan, an increase of 20.22% over the previous year.
Multi-category collaborative development, impressive growth rate of overseas channels
By product, the company achieved revenue of 6.24/3.13/68 million yuan for overall kitchen cabinet/overall wardrobe/ wooden doors in 23Q3, with a year-on-year change of -8.51%/+6.12%/+30.71%. We analyzed that the decline in kitchen cabinet revenue was mainly due to the fact that demand for retail terminals has not recovered.
Looking at each channel, the company's 23Q3 dealership/direct-run store/bulk business/ overseas achieved revenue of 5.49/0.30/3.52/276 million yuan, a year-on-year change of +3.61%/-1.33%/-16.70%/+64.97%. Our analysis of the decline in bulk business is mainly due to the company adopting a conservative channel strategy and strictly screening high-quality state-owned enterprises as partners through agency operations; our analysis of overseas channel growth is mainly due to the company's differentiated strategies in different regional markets, and management team adjustments are in place.
The decline in raw material prices combined with significant fee control results. Profitability increased steadily. In terms of gross margin, 23Q1-3 had a comprehensive gross margin of 28.90%, an increase of 0.42pct over the previous year, and the 23Q3 comprehensive gross margin was 29.80%, an increase of 1.94 pct over the previous year. We analyzed that the increase in gross profit was mainly due to 1) the decline in raw material prices compared to the same period; 2) the company actively promoted supply chain optimization and technological innovation, showing results in cost reduction and efficiency.
In terms of the period expense ratio, the period expense ratio of 23Q1-3 company was 23.19%, down 0.25pct year on year. Among them, the sales/management/development/development/finance expense ratio was 12.85%/4.95%/5.56%/-0.18%, respectively, and -0.10/+0.03/+0.07/-0.24pct, respectively. In 23Q3, the company's expenses for the period were 21.50%, up 0.33pct year on year. Among them, sales/management/R&D/financial expenses were 12.11%/4.19%/5.27%/-0.07%, respectively, and -0.28/+0.17/+0.88/ -0.44pct, respectively. Overall expenses during the period remained stable.
Investment suggestions: The company actively promotes digital transformation and upgrading, making comprehensive efforts through multiple channels and categories, and rapidly growing closets and wooden doors. We expect the company's operating income from 2023 to 2025 to be 37.55, 43.28, and 4.902 billion yuan, up 5.68%, 15.26%, 13.24% year on year, and net profit of 3.12, 3.60, and 414 million yuan, up 12.51%, 15.42%, and 15.02% year on year. The corresponding PE is 13.1x, 11.4x, and 9.9x, with a target price of 34.80 yuan for 23 years, maintaining the buy-A investment rating.
Risk warning: risk of increased market competition; risk of channel category expansion falling short of expectations; risk of rising raw material prices.