According to the announcement:
23 Full year: Revenue of US$1.38 billion (YOY -31%), net profit loss of US$37 million (prior profit of US$139 million);
23H2: Revenue of US$630 million (YOY -36%), net profit loss of US$86 million (previous value of profit of US$76 million);
Revenue: Dragged down by the North American industry's inventory loss and demand fluctuations
Division of business:
OPE: Achieved $81 billion (YOY -34%), mainly due to industry removal, conservative customer inventory policies, and unfavorable weather in North America in the spring of '23.
Power tools: Achieved $550 million (YOY -27%), mainly due to slowing housing demand and industry abandonment. Among them, the SKIL brand rebounded and grew in the second half of the year.
By region:
North America: Achieved $940 million (YOY -37%)
Europe: Achieved $280 million (YOY -11%)
Mainland China: Achieved US$100 million (YOY +1.1%)
Profit: increase cost investment
Gross profit margin: 28.1% (YOY-2.3pct), mainly due to inventory impairment preparations. According to Wind and company announcements, the number of inventory turnover days at the end of 21, 22, and 23 was 125, 157, and 209 days, respectively.
Expense ratio: Sales, management and R&D were 18%, 7%, and 5%, respectively, +7.0, +2.5, and +1.8pct year-on-year, respectively. Among them:
The increase in sales expenses is mainly due to increased investment in marketing expenses and expansion of dealer channels, and warranty provisions;
The increase in management costs is mainly due to continued investment in digital transformation.
Net profit margin: achieved -2.7% (-10pct).
Prospects:
The company believes that the company's own brands will continue to be superior to the industry in terms of end user demand (terminal sales). It is expected to benefit from increased penetration of lithium battery products, reversal of inventory removal cycles, and a rebound in customer demand expectations, and financial performance will recover and grow in 2024 and the next few years.
Profit forecasting
Combined with the annual report, we adjusted the profit forecast. We expect the company's operating income for 2024-2026 to be US$15.3, 18.4, and US$2.22 billion (US$17.1 and US$2.05 billion before 24-25), net profit to mother of US$0.42, 1.34, and US$155 million (previous values of US$1.03 and US$158 million between 24-25), and the corresponding EPS would be 0.08/0.26/0.30 (US$0.20/0.31 before 24-25), and 2024 Based on the closing price of $2.51 on March 28 (according to wind, the corresponding exchange rate is 1 US dollar = 7.82 HKD), the corresponding PE was 31/10/8 times, respectively, maintaining the “buy” rating.
Risk warning
Downstream demand falls short of expectations, industry competition intensifies, order acquisition falls short of expectations, risks such as fluctuations in upstream raw material costs, etc., the risk of untimely delivery of goods due to rising sea freight charges and port blockages, the risk of new technology iteration risks, deviations in industry space estimation, the risk of third party data distortion, and the risk that public data used in research reports may be delayed or not updated in a timely manner.