The company released its 2023 three-quarter report, and the Q3 revenue & profit side was still under pressure. During the reporting period, global macroeconomic recovery fell short of expectations, and overseas demand for massage appliances remained weak. The company's product restructuring and marketing channel layout continue to advance. As consumer demand and confidence improve and the European and American home appliance de-inventory cycle nears its end, the recovery of the company's overseas business is expected to drive a recovery in overall performance.
Demand recovery fell short of expectations, and Q3 revenue declined. 2023Q1-3 achieved revenue of 3.752 billion yuan, -20.1% year-on-year; net profit of 95 million yuan, +38.9% year-on-year; net profit after deducting 40 million yuan, -65.3% year-on-year. Corresponding to Q3, quarterly revenue was 1,407 million yuan, -8.8%; net profit was 53 million yuan, -4.0%; non-net profit minus 23 million yuan, -76.9% yoy. During the reporting period, the global macroeconomy was sluggish, overseas demand was weak, and the company's operations continued to be under pressure.
Product restructuring boosts gross profit margins, and profitability can be expected to recover. 2023Q3 achieved a gross profit margin of 35.5%, +4.0pcts over the same period last year, mainly due to product structure optimization combined with a decline in raw material prices. 23Q3 The company's sales/management/R&D expense ratio was +1.0pct/+1.3pcts/-0.2pct, respectively. The increase in the sales & management expense ratio was a two-way effect of rigid store expenses and declining revenue. In the end, 23Q3 achieved a net profit margin of 3.8%, +0.2 pct over the same period last year. As demand bottoms out and rebounds, leading to a recovery in revenue, the company's profitability can be expected to continue to improve.
Focus on the growth of private label business and look forward to a recovery in export sales. The company focuses on increasing the share of independent brand business. In the domestic market, the company enhances brand awareness by embedding advertisements in film and television variety shows and increases publicity; expands the number of stores and upgrades stock stores to expand offline channel leadership; consolidates the leading position of traditional e-commerce channels, focuses on developing Douyin channels, and at the same time strengthens cooperation with other leading anchors. During the “618” period, JD's special OG7608 Ten+ and Tmall's special X9 respectively ranked first in JD massage chair sales and Tmall's popular 10,000 yuan massage chair sales list. According to Jiuqian's data, the Q3 Aujiahua+ihoco brand's sales volume on Tmall and JD was +3.8% year-on-year, and domestic sales bottomed out and rebounded. Export sales account for a relatively large share of the company's revenue. 23Q1-3 accounts for 68% of overseas revenue. According to data from the General Administration of Customs, the export volume of 2023Q1-3 massage equipment is -16%/-4%/-4% compared to the same period last year. The decline has gradually narrowed, and demand improvements can be expected. The company is in a leading brand position in markets such as Malaysia and Singapore. With the steady advancement of online channel layout and the recovery of overseas macroeconomics and the end of the inventory removal cycle, the recovery of export sales has in turn driven the recovery of the company's overall performance.
Risk factors: Consumption recovery falls short of expectations; macroeconomic pressure; independent brand sales progress falls short of expectations; raw material costs fluctuate greatly; exchange rates fluctuate greatly.
Profit forecast, valuation and rating: Considering that the unit price of massage chair products is high, optional attributes are strong, and improvements in domestic and foreign demand are lagging behind, adjust the company's EPS forecast for 2023-25 to 0.27/0.39/0.54 yuan (the original forecast was 0.37/0.44/0.49 yuan), and the current price corresponds to 28/19/14 times PE. As an industry leader, the short-term operating pressure is obvious, but in the long run, it is still expected to benefit from both industry penetration and share growth. Considering that the recovery in industry demand is still uncertain, no target price will be given yet.