Key points of investment:
Leading company in the field of drying, achieved a high increase in performance in 2023
The company was founded in 1999 and is a leading enterprise in the domestic drying field, with a brand value of 22.809 billion yuan in 2023. In the first three quarters of 2023, revenue increased 10.71% year-on-year to reach 1,116 billion yuan. On January 24 this year, the company announced that net profit due to mother for the full year of 2023 is expected to reach 318 million yuan to 363 million yuan, an increase of 40% to 60% over the previous year.
The smart home industry has broad prospects, and the fields of smart drying and door locks will achieve steady growth
In 2022, the size of the domestic smart home market was 651,560 billion yuan, an increase of 12.33% over the previous year; IDC expects domestic smart home equipment shipments to exceed 500 million units by 2026. In 2022, the scale of the domestic smart clothes drying rack industry was 10.4 billion yuan, an increase of 19.50% over the previous year; iResearch predicts that the smart clothes rack industry will maintain a growth rate of about 20% in 2023-2024. According to Lotu Technology data, China's smart door lock market sold 18.01 million units in 2023, with a market size exceeding 20 billion yuan. It is expected to reach 40.9 billion yuan by 2027. Smart door locks meet the needs of intelligence and security, and falling prices may help stimulate an increase in product penetration. At the same time, B-side channels are diversifying to support the development of the industry.
Driven by product strength, the company has plenty of momentum for development
The company continues to strengthen its R&D capabilities and promote product innovation. By the first half of 2023, the group and its subsidiaries had obtained more than 1,300 national patents. In 2023, the company will focus on channel construction to improve the retail layout through rational layout and steady expansion of the “Frontier Renewal” campaign. The company's online sales model is mature. In 2018-2022, e-commerce channel revenue CAGR reached 31.61%. By 2023, the company was ranked first in sales in the Tmall and JD 618 promotion industry for 8 consecutive years. The increase in the price of the company's smart home products supports the increase in profitability, and the increase in product strength consolidates the product price base. In 2022, the company's Jinhu base was put into operation, and there is room for further expansion in the future. Within 2023, the company completed equity incentives and determined revenue targets for 2024.
Investment advice
Under a neutral scenario, it is estimated that in 2023-2025, the company's EPS will be 0.81 yuan, 0.98 yuan, and 1.17 yuan, respectively, and the corresponding PE valuation in 2024 will be 15.32 times. Considering that smart clothes drying rack products have good room for development in the domestic market, as a leading enterprise in the industry, the company works in multiple dimensions such as products, production capacity, and channels, and has a good foundation for medium- to long-term growth, so for the first time, coverage was given a “gain” rating.
Risk warning
Raw material price fluctuation risk, market competition and industry cross-border risk, real estate market regulation risk