Event: Liren Technology announced its 2023 performance forecast. The company expects to achieve net profit of 19.254 million yuan to 235.33 million yuan, YoY -62.6% ~ -54.3%; after conversion, Q4 will achieve net profit of 2.566 million yuan to 6.845 million yuan in a single quarter, YoY -75.1% ~ -33.5%. The company is continuing to expand categories such as small kitchen appliances, household appliances, kitchen utensils, etc., and is increasing the layout of emerging channels such as Douyin, and the revenue growth rate is expected to pick up.
2023Q4's revenue is under pressure: 2023Q4's revenue is mainly driven by air fryers and multi-purpose cookers. Due to factors such as the epidemic overdrafted demand for air fryers, the domestic air fryer industry is not booming. According to data from Aowei Cloud Network, online retail sales of Q4 domestic air fryers are YoY -54%. According to Jiuqian data, 2023Q4's online sales YoY is -53%. By category, the online sales of 2023Q4's electric bakes/multi-cookers/air fryers are YoY -33%/-85%/-90%, respectively.
2023Q4 profit declined year on year: 2023Q4 company's net profit YoY -75.1% ~ -33.5%, mainly due to: 1) the company optimized slow-selling inventory such as air fryers through price cuts, and the gross margin of air fryers declined; 2) the company increased investment in product research and development, brand promotion, and the construction of emerging e-commerce channels, and the cost investment increased year on year.
Investment advice: As a pioneer of electric cake pans in China, Li Ren is the leader in the electric cake pan segment. In terms of products, the company has stocked a large number of new products in the field of small kitchen appliances, and is actively expanding into new categories such as household appliances and cookware. In terms of channels, the company is increasing its investment in emerging channels such as Douyin and Kuaishou. Driven by new products and new channels, the company's revenue is expected to recover. The company's EPS for 2023 to 2025 is expected to be 0.30 yuan/0.42 yuan/0.48 yuan, respectively, maintaining a buy-A investment rating, and a price-earnings ratio of 75 times in 2024, which is equivalent to a six-month target price of 31.42 yuan.
Risk warning: raw material prices are rising, industry competition is intensifying.