Core views:
Export sales: Overseas demand is strong, and exports have exceeded expectations. (1) Short-term: Strong demand+low base, 24H1 export sales are expected to maintain high growth. According to data from the General Administration of Customs, the cumulative export value of household appliances in January-January 2024 was US$14.4 billion, +20.8% over the same period last year. The export sales performance of the small household appliances category was outstanding, achieving accelerated growth, and superior to the industry. According to the General Administration of Customs, export sales of small kitchen appliances such as juicers, bread makers, water dispensers, and electric ovens were +25%, +29%, +44%, and +23% year-on-year, respectively. In the household and personal care appliances category, the monthly export sales of hair dryers, electric irons, and vacuum cleaners were +30%, +35%, and +21%, respectively. The growth rate is faster than the industry as a whole. The company completed overseas inventory removal in the first half of 2023. Recently, overseas demand has been strong. We believe that under a low base, 24H1 export sales will maintain rapid growth. (2) Long-term steady growth: The company is deeply involved in the export of small household appliances, and its leading position is stable. It is expected that with the increase in export share and the expansion of new categories, the export business will return to a steady growth trend.
Domestic sales: Improved domestic sales are expected to contribute to growth elasticity. (1) Industry: Demand in the small household appliances industry is picking up at the bottom, and online channel sales of mainstream kitchen appliances are improving. (2) In the short term, the company will complete the acquisition of the Mofei trademark in 2023. In 2024, the company is expected to increase investment in Morphy brand marketing, and the launch of new Morphy products will accelerate markedly by the end of 2023. We believe that with the launch of new products and increased marketing, the domestic sales business is expected to improve quarterly in 2024, contributing to revenue growth elasticity. (3) In the long term, Xinbao has supply chain advantages and a multi-brand matrix layout, and is expected to surpass the industry.
Profit forecasting and investment advice. I am optimistic about the short-term inflection point of the company's export sales and the continuous increase in share due to strong manufacturing capabilities. Domestic sales of its own brands have achieved rapid growth through continuous product innovation.
Net profit due to mother is expected to increase by 2%, 20%, and 13% year-on-year in 2023-25, giving the company 15xPE in 2024, corresponding to a reasonable value of RMB 21.44 per share, maintaining a “buy” rating.
Risk warning. The promotion of new products fell short of expectations; overseas demand was sluggish; raw material prices rose sharply; the exchange rate fluctuated greatly; and the US imposed tariffs.