Event: Oppo Home announced the 2023 pre-increase performance forecast. The company expects to achieve net profit of 2.8 to 340 million yuan in 2023, YoY +17.5% to +41.0%. After conversion, Q4 is expected to achieve net profit of 0.7 to 120 million yuan, YoY -15.3% to +58.1%; net profit without deducted return to mother is expected to be 0.8 to 130 million yuan, YoY +76.0% to +196.3%. We believe that Q4 has been operating steadily, net profit without return to mother has increased significantly, and profitability has continued to improve year over year.
Steady growth in Q4 revenue: According to our judgment, the company's main sales channel situation in 2023Q4 is: 1) According to Jiuqian data, Opp 2023Q4 online sales YoY -12%/+9%/+250% YoY were YoY -12%/+9%/+250% respectively, and the Douyin channel continued to grow at a high rate. We judge that the company's e-commerce channel revenue is growing the fastest; 2) Opp's engineering and distribution channels have a leading edge, but due to the real estate market, we judge that the company's Q4 engineering and distribution channel sales growth is slowing down; we believe that Opp, as a leading enterprise in Yuba, is actively developing new products and new channels, and revenue is expected to continue to grow steadily.
Q4 profitability continued to improve: According to the median value according to the performance forecast, the company's Q4 net profit YoY +21.4%, and net profit from non-return to mother YoY +136.1%. The company's profitability improved sharply year-on-year in a single quarter, continuing the trend of improving profitability in 2023Q1-3. The growth rate of the company's net profit to mother is lower than the growth rate of net profit without deduction, mainly due to a large amount of impairment testing in 2022/Q4. We believe that the company's Yuba products continue to reduce internal costs, the proportion of new clothes dryers is expected to increase, and profitability is expected to continue to improve in the future.
Investment advice: Oppo's overall business pace is related to real estate, but it also has consumption attributes.
The company is a leading enterprise in the domestic Yuba industry, leading its peers in product innovation capabilities. Relying on products, the company strengthens its omni-channel layout, and brand awareness is expected to continue to increase. The company continues to explore new categories around the dual genes of home appliances and household appliances, which is expected to further open up room for growth. We expect Op Home's EPS for 2023 to 2024 to be 0.76/0.88 yuan respectively, maintaining a buy-A investment rating. The target price for 6 months is 12.32 yuan, which corresponds to a dynamic price-earnings ratio of 14 times in 2024.
Risk warning: Prices of raw materials have risen sharply, and the real estate industry is declining.