Short-term performance is under pressure, overseas revenue has increased significantly, and “purchases” have been maintained
On March 28, the company released its 2023 annual report. In 2023, it achieved revenue of 9.613 billion yuan (yoy -5.54%) and net profit to mother of 389 million yuan (yoy -26.58%). Affected by the general environment, consumer consumption behavior is biased towards rationality. Coupled with the decline in the prosperity of the small kitchen appliance industry, short-term company operations are still under pressure, and profitability is weakening.
We adjusted the company's 2024-2025 EPS to 0.60 yuan and 0.64 yuan respectively (previous values: 0.97 and 1.07 yuan), and introduced the 2026 EPS forecast value of 0.71 yuan. Comparable companies averaged 19x PE in 2024, according to Wind's unanimous expectations. The company operates steadily as an industry leader and deepens its multi-category layout. The “Joyang” and “Shark” brands jointly promote the company's development. We gave the company 20xPE in 2024, corresponding to a target of 12 yuan (previous value: 17.60 yuan), and maintained a “buy” rating.
Overseas business revenue has clearly recovered, with emerging segments growing rapidly by -5.54% year-on-year in 2023. By region, domestic revenue was -16.68% year over year; while overseas business benefited from a recovery in demand and the impact of a low base, revenue growth was impressive, +68.79% year over year. By product, the company continues to promote product structure optimization to achieve an increase in revenue scale for emerging categories such as Western appliances (+2.60% over the same period last year). By digging deeper into the needs of different groups and scenarios, in 2023, the company launched a series of high-quality new products, such as zero-coated non-stick rice cookers, quick-frying air fryers, and variable frequency light noise wall breakers, etc., and Space Series 2.0 products focusing on the middle and high-end markets of small kitchen appliances.
At the same time, the company further strengthened refined operation management; in 2023, the net cash flow from the company's operating activities reached 763 million yuan, +25.04% over the same period last year.
Actively control sales expenses under profit pressure to improve publicity efficiency. The company's gross margin in 2023 was 25.86%, -3.23pct year on year. At the cost level, the company's total rate in 2023 was -0.34pct year over year. Under profit pressure, the company actively controls sales expenses to improve publicity efficiency. In 2023, the company's sales expenses were -10.45%, sales expense ratio was -0.81 pct year over year; R&D expenses were -0.31%, R&D expenses rate was +0.21pct year over year; management expenses were +1.28%, management expenses ratio +0.27 pct year over year; and financial expenses ratio was -0.01pct year over year. The company's net profit margin for 2023 was 4.06%, -1.07pct year-on-year.
The prosperity performance of the domestic small household appliance industry is divided. In a macroeconomic environment where challenges and opportunities coexist, consumer consumption is biased towards rationality. At the same time, awareness of personal care has increased, and the prosperity performance of the domestic small household appliance industry is divided. 1) Domestic demand for small kitchen appliances was relatively rational in 2023; according to Aowei Cloud Network, retail sales of small kitchen appliances in 2023 were 54.93 billion yuan, -9.6% compared with the same period last year. 2) The scale of the household cleaning/personal care small household appliances segment has increased; according to Aowei Cloud Network, retail sales of cleaning appliances/hair dryers/electric toothbrushes/shavers in 2023 were +6.8%/+29.9% +4.2%/+11.2%, respectively. As a leading enterprise in the domestic small home appliance industry, the company is expected to continue to innovate and break through with outstanding R&D capabilities and channel construction to seize new trends and opportunities in the market.
Risk warning: increased market competition; risk of high inflation overseas; risk of new products falling short of expectations.