Key points of investment:
23Q4 results fell slightly short of expectations. In 2023, Beieasy is expected to achieve revenue of 11.25-1,375 million yuan, an increase of 26-53%; it is expected to achieve net profit of 0.53 to -0.36 billion yuan, a year-on-year loss reduction of 57-71%; and net profit without return to mother of -0.63 to -0.42 billion yuan, a year-on-year reduction of 52-68%. Among them, Q4 is expected to achieve revenue of 183-433 million yuan, -26% -+75%; realized net profit to mother of -0.37 to -20 billion yuan, 22Q4 was -67 million yuan; realized net profit after deduction of -0.41 to -20 billion yuan; and 22Q4 was -0.69 million yuan. The main reason for the loss in performance was: in 2023, the company strengthened its brand building strategy and invested heavily in related channel expenses, causing the company to spend more on sales expenses. The 23Q4 performance was slightly lower than market expectations.
The Douyin channel continues its high growth trend, and the profitability of each channel is expected to improve. In terms of online channels, with the launch of the popular N5Mini shoulder and neck massager, the company's online channel revenue grew rapidly. According to Jiuqian data, 23Q4's online platform (Tmall + JD+ Douyin) achieved revenue of 234 million yuan, +36% over the same period. Among them, Tmall, JD, and Douyin achieved revenue of 1.04, 0.77, and 52 million yuan respectively, +16%, +12%, and +277% year-on-year respectively. In 2024, the company expects to launch a number of popular new products. With the rapid increase in the scale of the Douyin channel, the channel's profitability is also expected to improve. In terms of offline channels, with the continuous recovery of offline customer flow and the continuous drainage of popular online products, and the gradual adjustment of the company's franchise model, the company's offline channel continued to reduce losses in the first half of the year, and profit side transformation can be expected.
Launch a buyback program to demonstrate confidence in future development. On January 30, 2024, the company announced its repurchase plan. It plans to repurchase shares not less than RMB 25 million and not more than RMB 50 million at a price of not more than RMB 49.36 per share through centralized bidding, corresponding to 50.65-10.13 million shares, accounting for 0.59-1.18% of the company's total share capital. Repurchases of shares will be used in employee stock ownership plans or equity incentives at an appropriate time in the future. The repurchase plan highlights the company's information on future development, improves the company's long-term incentive mechanism, and fully mobilizes employees' enthusiasm and cohesion.
The profit forecast was lowered and the “increase in holdings” investment rating was maintained. The company's initial spending on emerging online channels was high. We lowered our profit forecast. We expect to achieve net profit attributable to mother of 0.42, 0.79, and 115 million yuan in 2023-2025 (previous values were 0.21, 0.94, and 124 million yuan), respectively. The year-on-year decline narrowed by 66%, corrected, and +45%, respectively. We use Covos, Stone Technology, and Aojiahua as comparable companies. The average PEG for 24 years is 0.75 times, and the company's PEG for 24 years is 0.69 times. Corresponding to the current market value, there is room for a 9% increase in market value, maintaining an “increase” investment rating.
Risk warning: risk of fluctuations in raw material prices; risk of new product launches falling short of expectations; high sales expense ratio.