Events: The company released its 2023 three-quarter report. The first three quarters achieved revenue of 1,298 million yuan, -16.91% year-on-year; net profit of 152 million yuan, +20.74% of the previous year; net profit from net income of 145 million yuan, +22.28% year-on-year.
Comment:
Q3 The revenue side is still under pressure, and many factors favor profit improvement. Looking at the single quarter, 2023Q1/Q2/Q3 achieved revenue of 3.86/5.04/408 million yuan, a year-on-year difference of -31.71%/-6.03%/-11.44%, respectively; achieved net profit of 0.38/0.67/0.47 billion yuan, a year-on-year difference of -35.70%/+140.42%/+19.13%, respectively. In the context of weak recovery in domestic and foreign markets, Q3 companies continued to grow rapidly on the revenue side. The company has stable cooperative relationships with customers in the US, South Korea, etc., and it is expected that the company's revenue side will continue to improve as industry demand picks up and new products are launched in the future.
Raw material prices have declined & product and customer structure has been optimized, and profit levels have increased. The company's gross margin for the first three quarters of 2023 is +5.47pct to 31.85%, which is expected to be mainly due to falling raw material prices, product and customer structure optimization, and the company's own management efficiency. In terms of period expenses, the company's sales/management and R&D/financial expenses for the first three quarters of 2023 were +2.29/ -0.37/ +0.66pct to 11.67%/-0.97%, respectively. Under the combined influence, net profit margin for the first three quarters was +3.67pct to 11.75%. Q3 The gross profit margin for the single quarter was 32.95% (+5.64pct, +0.01pct month-on-month), and the net profit margin was 11.55% (+3.00pct, month-on-month -1.87 pct), and the company's overall profitability improved year over year.
It is proposed to implement dealer shareholding plans & actual controller repurchases, demonstrating confidence in development. The company announced that some dealers plan to jointly set up trust plans to purchase company shares through centralized bidding and bulk transactions in the secondary market, with a total scale of 50 million to 100 million yuan. We believe that on the one hand, the dealer shareholding plan shows the confidence of dealers in the company's future development, and on the other hand, the implementation of this plan will help the company and dealers further deepen cooperation and achieve a win-win situation. Furthermore, the actual controller of the company proposed the repurchase of the company's shares for equity incentives or employee stock ownership plans. The proposed repurchase amount is not less than 50 million yuan, not more than 100 million yuan, which fully demonstrates the company's management's confidence in the company's future operations and is conducive to the company's improvement of the incentive mechanism and long-term development.
Investment suggestions: The company continues to cultivate the massage chair track and actively carry out customer development and product upgrades. Considering the strength of the recovery of the consumer environment, we adjusted the company's profit forecast. The company's net profit forecast for 2023-2025 is estimated to be 2.04/2.45/285 million yuan (original forecast value was 2.25/2.76/321 million yuan), corresponding to the current market value of PE, 15/12/11 times, respectively, maintaining the “buy” rating.
Risk warning: New product development falls short of expectations, raw material prices fluctuate, consumption recovery falls short of expectations, etc.