23Q4 revenue -4.53% YoY. The company achieved revenue of 9.407 billion yuan in '23, +19.66% year on year, net profit to mother of 1,746 billion yuan, +26.01% year on year, net profit without return to mother of 1,597 billion yuan, +16.09% year on year. Among them, Q4 revenue was $1,625 million, or -4.53% year-on-year, mainly due to the high base for the same period in '22. Net profit attributable to mother was 55 million yuan, after deducting net profit not to mother - 210 million yuan. Q4 Net operating cash flow was 705 million yuan, +19.13% year over year, and contract liabilities at the end of 23 billion yuan were 1.02 billion yuan, +25.13% year over year.
The year-on-year sales expense ratio was +0.71 pct. The company's 23-year gross profit margin was 68.89%, +0.6 pcts year on year, sales expense ratio was 41.02%, year on year. We expect that as the company's operating capacity gradually increases, there will be more room for optimization in the future. Management expense ratio is 7.16%, +0.17pcts year over year, financial expense ratio -0.59%, -0.13pct year on year, net profit margin 18.56% year on year, and +0.94 pcts year on year. Among them, Q4 gross profit margin was 65.22%, -1.26pcts year on year, sales expense ratio 69.58%, and year-on-year +5.9pcts, mainly due to large investment in brand building, management expenses ratio of 12.33%, +5.53pct year over year, net profit margin of -9.53%, and -3.88pcts year over year.
Domestic offline business resumed growth in '23, and overseas LSG's revenue grew rapidly. Specifically: 1. Domestic business: ① The main brand “Tomson Beijian” achieved revenue of 5.4 billion yuan, +21.48%; the joint care brand “Jianli Duo” earned 1,179 million yuan, -2.52% year over year; “Life-Space” domestic product revenue was 445 million yuan, +46.84% year over year. ② By channel, offline channel revenue accounted for about 58.1% of domestic revenue, +12.39% year over year; online channel revenue was +27.53% year over year. 2. Overseas business aspects:
LSG achieved revenue of 989 million yuan, +23.03% year over year (+22.38% year over year in Australian dollar terms).
Planned revenue for 2024 grew in single digits year over year. The company launched an equity incentive plan to grant 16.8 million restricted shares to 36 people, including general manager Lin Zhicheng, director Tang Hui, and 34 core technology (business) executives, mainly personnel in key positions in major business departments directly responsible for the company's revenue, profit, and market share. In terms of performance assessment, based on 2022, revenue for 2024/2025/2026 was not less than 29.3%/39.6%/50.8% (corresponding year-on-year growth rate was 8%). At the same time, with regard to the 24-year business target, the company disclosed in its 23-year annual report that it plans to achieve single-digit year-on-year revenue growth in 24 years.
Profit forecasting and valuation. We expect the company's 24-26 EPS to be 1.17/1.32/1.5 yuan respectively, which is 14-33 times that of the company's 24-year PE. We believe that as a benchmark enterprise in the VDS industry, the company is expected to maintain rapid growth in the future as consumption gradually recovers, large single products are gradually released, and channel reform dividends are gradually revealed. A certain valuation premium will be given to the company, 20-25 times PE over 24 years, corresponding to a reasonable value range of 23.4-29.25 yuan, and given a “superior to the market” rating.
Risk warning. Competition in the industry is intensifying, regulations are getting stricter, food safety, etc.