Key points of investment:
The 23-year performance is in line with expectations, and it is proposed to pay 5.5 yuan for every 10 shares. The company released its 2023 annual report, achieving full year operating income of 3.205 billion yuan, up 10.34% year on year, achieving net profit attributable to shareholders of listed companies of 413 million yuan, an increase of 41.37% year on year, and net profit of 392 million yuan after deduction, an increase of 40.55% year on year. Revenue and performance are in line with our previous expectations. In the same period, the company announced the 2023 profit distribution plan. It plans to distribute a cash dividend of 5.5 yuan (tax included) to all shareholders for every 10 shares. Based on the share capital on the announcement date, it is expected to distribute a cash dividend of 210,648,472.65 yuan (tax included). The dividend ratio increased to 50.99% of net profit to mother in '23, corresponding to the current dividend rate of about 3.7%.
Demand for refrigerated display cases overseas is strong, driving a steady increase in overall revenue. By business, commercial refrigerated display cases achieved revenue of 2,084 billion yuan, an increase of 17.93% year on year. We expect the rapid growth of the refrigeration business to mainly benefit from strong customer demand in overseas markets; commercial refrigerated display case business achieved revenue of 569 million yuan, up 5.05% year on year, and the overall revenue growth rate remained stable; supermarket display cases achieved revenue of 224 million yuan, down 30.6% year on year, mainly due to fluctuations in individual customer business volume. In terms of commercial intelligent vending machine business, the company continued to expand customers, and overall revenue increased 9.52% to 1.76 100 million yuan. Looking at the subregion, the overall domestic market remained stable. The company achieved annual revenue of 2,138 billion yuan, a slight increase of 0.05% over the previous year. On the export side, benefiting from the increase in demand for commercial refrigerated display cases from overseas customers, the company achieved revenue of 971 million yuan, a sharp increase of 41.02% over the previous year.
The export business has increased rapidly, and profitability has increased dramatically. In 2023, the company achieved a gross sales margin of 29.66%, +6.04pcts year on year. The forecast is a combination of factors such as: 1) the year-on-year decline in raw material prices; 2) the depreciation of the RMB; and 3) the rapid growth of overseas business with high gross margins. In terms of cost ratio, the company's sales expense ratio in 2023 is +2.35pcts to 7.60% year on year, which is expected to be mainly affected by after-sales cost factors in some overseas regions; the management expense ratio increased slightly by 0.20 pcts to 3.25% year on year, R&D expenses decreased by 0.28 pcts to 3.39% year on year, and the financial expenses ratio was +0.37 pcts to -1.15% year on year, and finally recorded the company's net sales margin of 12.89%, +2.42 pcts year on year.
Maintain a “buy” investment rating. Considering the intense competition in the refrigerated display cabinet business, we slightly lowered our previous profit forecast for 2024-2025 to 487/568 million yuan (previous value was 493/592 million yuan) and added 647 million yuan in 2026, up 17.8%/16.7%/13.9% year on year, respectively, corresponding to current price-earnings ratios of 12X/10X/9X, respectively. The company has a stable advantage in the field of refrigerated display cases. With the continuous development of refrigerated customers, the second growth curve is expected to accelerate and maintain a “buy” investment rating.
Risk warning: risk of fluctuations in raw material prices; risk of exchange rate fluctuations; risk of increased market competition.