Key points of investment
Incident: On March 26, Goodboy International announced its 2023 annual results. In 2023, the company achieved total operating income of HK$7.927 billion, -4.4% year-on-year, and -3.2% constant currency caliber; realized net profit of HK$203 million, +507.69% year-on-year, in line with the forecast value.
H2's performance was in line with expectations, and profitability recovered significantly. 2023H2 achieved total revenue of HK$4,038 billion, +3% year over year; Q4 revenue was HK$2,121 billion, +15% year over year, and revenue was stable from quarter to quarter; H2 net profit to mother was HK$178 million, +411% year over year, in line with expectations. The gross margin in 2023 was 50.1%, +9.6pct year on year, a record high. The H2 gross margin was 54.1%, +11.4pct year over year, mainly due to improved shipping costs, increased revenue share of high-margin brands, manufacturing cost control, and favorable foreign exchange rate fluctuations. The net profit margin in 2023 was 2.6%, +2.2pct year on year, and the H2 net profit margin was 4.4%, +3.5pct year over year. The increase in gross margin led to a significant recovery in profitability.
Cybex and Evenflo grew strongly, further increasing their market share. By business, in 2023, the strollers/car seats/non-durable goods/other segment achieved revenue of HK$31.76/33.17/6.40/ HK$795 million, -4.2%/+4.0%/-20.0%/-19.5% year-on-year. By brand, Cybex/GB/Evenflo/Blue Chip and other businesses were HK$36.97/11.61/29/7.90 billion, respectively, +12.5%/-21.2%/-1.1%/-35.7%, constant currency caliber +11.1%/-17.6%/+1.3%/-33.0%; Cybex/GB/EVEN/Flo blue chip and other revenue for the fourth quarter was HK$9.64/2.65/6.26/ 267 million, YoY +14.5% /- 19.8%/+44.5%/+9.3% Overseas markets have performed well, and market share has further increased. Among them, Cybex's revenue grew strongly due to its brand position, product portfolio, and omni-channel distribution network; Evenflo's revenue rebounded sharply in the first three quarters, and Q4 revenue rebounded sharply. The performance of various categories surpassed the market, and gross margin increased dramatically.
Further strengthen the market position. In 2024, the company will further consolidate its position as an industry leader through one-stop vertical integration, product innovation, model innovation, and digitalization. Cybex brand demand remains strong, focusing on improving profitability; GB brands are undergoing scale adjustments and business model transformation, deepening new retail strategies, and continuing product development and innovation; and the Evenflo brand continues to grow in revenue and market share through digital channels and product innovation.
Profit forecast and investment rating: As a leader in the children's durable goods industry, Goodboy International's diverse brands meet the needs of consumers in different markets. With the steady growth of the European and American markets and business adjustments in the Asia-Pacific market, the company's profitability is expected to gradually improve. Based on the recovery in gross margin, the 2024/2025 increase and the 2026 profit forecast, Goodboy International's net profit for 2024-2026 was HK$2.4/27/HK$310 million respectively (the value before 2024/2025 was HK$15,220 million), corresponding to the PE valuation 5/4/4 times, maintaining the “increase” rating.
Risk warning: Industry scale expansion falls short of expectations, risk of global economic fluctuations, etc.