Incident: In 2023, Feike Electric achieved operating income of 5,060 billion yuan, up 9.35% year on year; net profit to mother was 1,020 billion yuan, up 23.90% year on year; net profit after deducting non-return to mother was 886 million yuan, up 14.88% year on year. Among them, 2023Q4 revenue was 1,066 billion yuan, up 16.72% year on year; net profit to mother was 193 million yuan, up 138.02% year on year; net profit after deducting non-return to mother was 172 million yuan, up 138.61% year on year.
vRui grew rapidly and profitability continued to improve: In 2023, Flyco Electric's sales structure continued to deepen, and high-end products continued to gain strength, accounting for 50.95% of sales, an increase of 5.73 percentage points over the previous year. The sub-brand vPro grew rapidly, achieving revenue of 869 million yuan, an increase of 115.48% year on year; sales accounted for 17.17%, up 8.44 percentage points year on year. Product gross margin continues to be optimized to drive overall profit growth. The gross profit margin for personal care appliances and household appliances in 2023 was 57.77% and 41.63%, up 3.52 and 1.94 percentage points from the previous year.
Increase investment in brand operation and strengthen core competitiveness: in 2023, Feike Electric's sales expenses were 1,477 billion yuan, up 29.28% year on year; sales expenses ratio was 29.19%, up 4.50 percentage points year on year. Deepen “C-terminal” reforms online and focus on creating a popular model for differentiated technological innovation products; using social media such as Douyin and Xiaohongshu to expand emotional holiday marketing; strengthen brand self-broadcast operations and improve traffic conversion efficiency. Combining the offline brand upgrade strategy, the vRui brand has steadily taken over the original Feike distribution channels and continues to strengthen the “direct supply” and “refinement” of regional distribution in KA stores. Open new brand experience stores to open up online and offline channel traffic, strengthen the young and technological brand image, and enhance consumer stickiness.
Increase the scale of self-production and promote quality and efficiency: Looking forward to 2024, Feike Electric will adhere to the development strategy of brand upgrading, promote C-end, direct supply, and content upgrading of the marketing model through marketing management innovation, and explore the growth potential of the main business in depth. Continuously increase self-production capacity and improve production efficiency. Outsourced production accounted for 31.88% in 2023, a year-on-year decrease of 12.92 percentage points. Product price increases and cost optimization go hand in hand, and the profitability of Flyco Electric is expected to increase steadily in 2024.
The dividend is 2.3 yuan per share, and the dividend is continuous and stable: in 2023, Feike Electric plans to distribute 23 yuan for every 10 shares to all shareholders, accounting for 98.26% of the net profit attributable to common shareholders of listed companies during the same period. The cash dividend ratio for the past three years (2020-2022) reached 82.89% of the net profit realized in the consolidated statements for the past three years. In the future, the company will continue to do a good job of returning investors while meeting the company's capital requirements for normal production and operation, and maintain the stability and continuity of dividends.
Profit forecast: In 2023, the Feike brand will continue to upgrade, laying the foundation for performance; the vPro brand will grow rapidly to fully accept the middle- and low-end market share. Overall developments have generally met expectations. Looking ahead to 2024, Feike Electric emphasizes its determination to improve quality and efficiency. The sales side will continue to push forward channel reforms and increase traffic conversion rates. The production side will increase the scale of its own production and give full play to the advantages of scale. We believe that the company's profitability will continue to improve. Net profit from 2024-2026 is expected to be 1,134/12.90/1,507 billion yuan. The predicted PE corresponding to the current stock price is 19, 16, and 14 times, maintaining the “increase” rating.
Risk warning: risk of macroeconomic fluctuations, risk of large exchange rate fluctuations, technological innovation and application falling short of expectations, increased risk of market competition