Incident: Feike Electric announced its 2023 annual report. In 2023, the company achieved revenue of 5.06 billion yuan, YoY +9.4%; realized net profit of 1.02 billion yuan, YoY +23.9%; realized net profit without deduction of 890 million yuan, YoY +14.9%. After conversion, the 2023Q4 single quarter achieved revenue of 1.07 billion yuan, YoY +16.8%; realized net profit of 190 million yuan, YoY +138.5%; realized net profit without deduction of 170 million yuan, YoY +138.6%. We believe that the increase in the average price of the company's shavers and hair dryers will drive the company's revenue and profitability to continue to increase.
Q4 Revenue growth accelerated in a single quarter: The company's 2023Q4 revenue growth accelerated month-on-month. We believe that the company was mainly affected by the pandemic in 2022, and the base for the same period was low. According to Jiuqian data, the 2023Q4 sales of Fico's Tmall, JD, and Douyin channels were YoY -43%/-29%/+53%, respectively, and the overall online channel was -24%. The Fico Douyin channel still maintained a high revenue growth rate. While promoting the upgrade of the “Feike” main brand, the company is also improving the positioning of the “vPro” brand. According to the company announcement, vPro's 2023H1/H2 revenue was +144%/98% YoY, respectively, and 2023H2 maintained a high growth rate. We believe that the high growth of the company's Douyin channel and the increase in vPro brand revenue will continue to drive the company's overall revenue growth.
The average price of Q4 hair dryers continues to rise: According to Jiuqian data, Feike's 2023Q4 online shaver/hair dryer/electric toothbrush sales were YoY -14%/+22%/+43%, respectively. Among them, the average price of electric hair dryers increased to 189 yuan in 2023Q4, an increase of 99% over the previous year, and the average price increased rapidly. We think it is mainly driven by new high-speed hair dryers. The Q4 electric toothbrush line continues to grow at a high rate, which is the company's second growth curve. The driving effect of electric toothbrushes on the company's revenue will be further evident. We believe that the release volume of new high-speed hair dryers and electric toothbrushes is expected to continue to increase the overall average price of the company's products.
Q4 profitability increased year on year: the company's Q4 net interest rate was 18.1%, up 9.2 pct year on year.
The company's net interest rate increased rapidly year on year, mainly because the company's profitability declined sharply last year due to the pandemic, and the 2022Q4 net interest rate base was low. The company's sales expenses ratio further increased to 31.7% month-on-month in Q4, and the month-on-month increase slowed down, indicating that the company is gradually beginning to strengthen refined marketing management. In addition, the company's Q4 income tax was -0.2 billion yuan, mainly due to the company's previous certification as a high-tech enterprise, and income tax adjustments for the first period of 2023 in Q4. We believe that the increase in the company's share of high-end products is expected to continue to improve the company's profitability (see the in-depth report “With the rise of Guochao, can Fico make further efforts to raise prices?”).
Investment advice: As a leading domestic shaver company, Feike has gradually narrowed the average price gap with foreign brands. The launch of a new high-speed hair dryer in 2023 will not only further increase the average price of the product, but the growth of multiple categories is also expected to open up room for further growth. The company's EPS is expected to be 2.52/2.79 yuan from 2024 to 2025, and the 6-month target price is 57.96 yuan, corresponding to 23 times PE in 2024, maintaining a buy-A investment rating.
Risk warning: Competition in the industry is intensifying, and consumer acceptance of new products falls short of expectations.