Introduction to this report:
The company achieved impressive revenue growth for the full year of 2023, with Douyin channel sales; net profit decreased year-on-year losses, and large single product breakthroughs combined cost reduction and efficiency measures created a positive impetus.
Key points of investment:
Investment advice: The company's revenue performance in 2023 is impressive, and the performance is under pressure in the short term. We maintain our profit forecast. We expect EPS to be -0.56/0.88/1.31 yuan in 2023-2025, maintain a target price of 30.70 yuan, and maintain a “cautious increase” rating.
Performance summary: The company achieved revenue of 1,276 billion yuan in 2023, +42.4% year on year; net profit to mother of -0.48 million yuan, a year-on-year decrease of 77 million yuan; net profit after deducting non-return to mother of -56 million yuan, a year-on-year loss of 75 million yuan, which is in line with previously announced performance forecasts. Among them, in 2023Q4, the company achieved revenue of 334 million yuan, +35.2% year on year; net profit due to mother - 31 million yuan, a year-on-year loss of 0.38 million yuan; net profit after deducting non-return to mother - 34 million yuan, a year-on-year loss of 35 million yuan.
Short-term performance is under pressure, and net profit is reduced year-on-year: the company's Q4 performance is expected to be under pressure in the short term. The main reasons are: 1) strong seasonal discounts, which have an impact on product profit margins; 2) calculation of one-time gains and losses such as asset impairment losses. Net profit in 2023 was reduced by about 77 million yuan compared to 2022, mainly due to the adoption of large single product breakthroughs to drive performance, and at the same time, the company continued to deepen cost reduction and efficiency, which had a positive impact on overall gross margin.
Continued iteration of new products, accelerated distribution and promotion: The core reason for the company's revenue growth in 2023 was to successfully use the Douyin channel to create the N5 Mini popular neck massager. On this basis, the company will launch a variety of new products in 2024. Product iteration and new category layout are worth looking forward to; in addition, the company began to increase its franchise channel layout in 2023. Previously, the company's products were positioned at the middle and high-end, and many stores were laid out in first-tier and second-tier cities through direct management. The acceleration of the sales pace in 2024 is expected to gradually slow down the company's offline channels.
Risk warning: There is uncertainty about new products and explosions, and there is a risk of price competition in the industry