Event: On March 21, 2024, Hairong Cold Chain released its 2023 annual report. In 2023, the company achieved total revenue of 3.205 billion yuan (YoY +10.34%), net profit attributable to mother of 413 million yuan (YoY +41.37%), and net profit not attributable to mother of 392 million yuan (+40.55% YoY).
2023Q4's performance growth rate is impressive, and commercial refrigerated display cabinet revenue continues to grow rapidly. 1) On a quarterly basis, 2023Q4 achieved total revenue of 707 million yuan (+20.24% year over year) and net profit to mother of 57 million yuan (+140.08% year over year). The performance growth rate was impressive, which may be affected by the expansion of the company's business scale, product structure optimization, fall in raw material prices, and exchange earnings. 2) By product, the revenue of the company's commercial refrigerated display cases, commercial refrigerated display cases, and commercial smart vending machines in 2023 was 2,084 billion yuan (+17.93%), 569 million yuan (+5.05% year over year), 224 million yuan (-30.60% year over year), and 176 million yuan (+9.52% year over year). Among them, the commercial refrigerated display case business expanded and superimposed product structure optimization to help achieve continuous and rapid revenue growth. 3) By region, the company's domestic and overseas revenue in 2023 reached 2.118 billion yuan (+0.05% YoY) and 971 million yuan (+41.02% YoY). Domestic sales performance was relatively steady. The high increase in export sales was mainly driven by the commercial refrigerated display case export business.
2023Q4 gross and net margins both increased, and cost-side investment increased due to the expansion of business scale. 1) Gross profit margin: 2023Q4 company's gross margin was 29.34%, or 4.83pct year on year, or due to improvements in customer and product structure and falling raw material prices compounded by exchange gains; 2) Net profit margin: The net interest rate of the 2023Q4 company was 7.86%, +3.81 pct year over year, the increase was slightly less than the gross profit margin, or due to an increase in the cost ratio during the period. 3) Cost side: 2023Q4's sales/management/R&D/finance expense ratios were 13.42/4.38/4.31/ -0.17%, respectively, compared with +4.78/+0.18/-2.67/-1.23ct, respectively. The increase in sales expenses was significant. The main reason was the increase in sales and after-sales personnel due to the expansion of the company's business scale, as well as the increase in sales staff remuneration levels and after-sales service expenses.
Develop new products to enrich the product matrix and continue to expand domestic and foreign markets. 1) Product side: In 2023, the company launched new smart sales cabinets, frozen goods cabinets, retractable door cabinets, etc., to achieve technological breakthroughs and a rich product range to meet consumers' energy-saving, intelligent and differentiated needs. 2) Market side:
a) On the domestic side, the company's commercial refrigerated display case market position is stable, commercial refrigerated display case sales are growing rapidly, commercial smart cabinet product structure is improving, and supermarket display cases continue to launch new products favored by the market; b) Overseas, the commercial refrigerated display case business continues to grow rapidly, commercial refrigerated display cases are developing steadily, and the company's overseas market expansion continues to advance.
Investment advice: Industry side: Driven by relevant policy support, the cold chain logistics equipment industry is expected to maintain a good momentum of development. Company side: Flexible production management systems help create specialized, differentiated and customized products, strengthen product digitization and intelligent technology research and development, continuously optimize product and customer structures, and actively explore domestic and foreign markets. The company's revenue and profit are expected to continue to grow. We expect the company's net profit to be 486/563/638 million yuan in 2024-2026, corresponding EPS of 1.26/1.46/1.65 yuan, and the current stock price corresponding PE is 12.66/10.92/9.65 times, covering the first time, giving it a “buy” rating.
Risk warning: Fluctuations in raw material prices, relative concentration of customers, seasonal fluctuations in main products, exchange rate fluctuations, etc.