Incident Overview
The company released its 2023 annual report:
2023: Revenue of $5,060 billion, +9.35% YoY; Net Profit to Mother of $1,020 million, +23.90% YoY; Net Profit before deducting RMB886 million, +14.88% YoY.
23Q4: Revenue of 1,066 billion yuan, +16.72% year on year; net profit to mother of 193 million yuan, +138.02% year on year; net profit without deduction of 172 million yuan, +138.61% year on year.
Profit distribution plan: It is proposed to distribute a cash dividend of 23 yuan for every 10 shares, for a total distribution of 1.02 billion yuan, corresponding to a dividend payment rate of 98.26%.
Analytical judgment
Revenue side: The dual-brand strategy progressed in an orderly manner. Feike's main brand promoted popular models such as “smart sensing” shavers, portable “space flying saucer shavers”, and “Galaxy Star Ring” high-speed hair dryers, which led to a continuous increase in the company's sales share of high-end products, reaching 50.95% in 23 years, an increase of 5.73 percentage points over the previous year. The sub-brand vPro undertook an orderly approach, and its share of sales increased to 17.17% in '23, an increase of 8.44 percentage points over the previous year. In terms of brand operation, we will continue to strengthen holiday emotional marketing strategies, increase investment in content marketing, and improve the level of content production and content operation. The channel side strengthens Douyin cooperation to promote “direct supply” of KA stores, “refinement” of regional distribution, and “integration” of brand experience stores.
Profit side: Product upgrades have led to significant increases in gross margin and net margin. In '23, the company achieved a gross sales margin of 57.10% (YOY+3.47pct), a net profit margin of 20.15% (YoY+2.37pct); corresponding Q4 gross sales margin of 54.80% (YoY+1.08pct), and a net profit margin of 18.07% (YOY+9.21pct). In terms of period expenses, sales and investment increased. The company's sales/management/R&D expenses rate in '23 was 29.19%/3.51%/1.96%, respectively, year-on-year
+4.50pct/+0.03pct/+0.04pct; corresponding Q4 was 31.70%/6.03%/2.04%, respectively, -0.29pct/+1.06pct/-0.04pct.
Investment advice
Our 24-26 revenue forecast is $55.56/62.10/6.943 billion, or +9.82%/+11.76%/+11.81% year-on-year, respectively. In terms of gross margin, combined with the trend of product upgrades, it is estimated to be 58.60%/59.60%/59.60% for 24-26, respectively. The net profit corresponding to the mother for 24-26 was 11.50/13.20/1,488 billion yuan, respectively, +12.74%/+14.83%/+12.75% year-on-year. The corresponding EPS was 2.64/3.03/3.42 yuan respectively. Based on the closing price of 50.78 yuan on March 12, 24, the corresponding PE was 19.24/16.76/14.86 times, respectively. The average PE of a comparable company in 24 years was 18.2 times. It was covered for the first time, giving it an “increase in weight” rating.
Risk warning
The recovery in domestic consumption fell short of expectations; the expansion of new products fell short of expectations; and raw material prices rose sharply.