Event: The company released its 2023 annual report. In 2023, the company achieved total operating income of 24.248 billion yuan, an increase of 19.95% year on year; realized net profit of 741 million yuan, an increase of 203.04% year on year; net profit after deducting non-return to mother was 749 million yuan, an increase of 629.43% year on year. Among them, 2023Q4's total revenue for a single quarter was 5.08 billion yuan, up 4.96% year on year; net profit to mother was 242 million yuan, up 194.22% year on year, and net profit from non-return to mother was 236 million yuan, up 869.63% year on year. The total cash dividend for 2023 was 309 million yuan, with a dividend ratio of 41.7%.
Export revenue drove overall growth, and the net interest rate for domestic and foreign air conditioning sales increased markedly. By product: Revenue from refrigerators, air conditioners, washing machines, small household appliances and kitchen and bathroom increased by 18.57%, 18.24%, 76.37%, and 15.16% in '23. The net margin for domestic air conditioners increased by 1 pct to 2.87%, and the net margin for export air conditioners also increased by 1 pct to 4.29%. Subregion: Domestic and foreign revenue increased by 10.80% and 46.52% in 23 years.
Non-recurring income led to an increase in net interest rates. Gross profit margin: 23A/23Q4 gross margin +0.24/-1.28pct year-on-year to 13.94%/15.82%. The gross margin of 23A refrigerators and air conditioners was +1.86% and -1.40% year-on-year.
Rate side: 2023Q4 sales/management/R&D/finance rate was 6.63%/1.87%/3.59%/-0.22%, year-on-year change -0.53pct/0.18pct/0pct/-0.72pct. Financial cost optimization is mainly due to an increase in interest income and a reduction in exchange losses. Net profit margin: 23A/23Q4 net margin +1.82/3.09pct year over year to 3.19%/5.00%. Net interest rates are mainly affected by other income, income from changes in fair value, and income tax, accounting for 35%, 28%, and 13% of net profit, respectively, +9/+10/-8pct. Other earnings are mainly value-added tax deductions for new advanced manufacturing industries, and income from changes in fair value is mainly assessed income from forward foreign exchange contracts and other non-current financial assets.
Inventories and contract liabilities grew rapidly, and the sale of goods received healthy cash. Judging from the balance sheet, as of 23Q4, the company's inventory was 18%/12% year over year, and contract debt was 13%/31% year over month, and the company's “profit reservoir” was sufficient; judging from the cash flow statement, the cash received from 23Q4 sales products also increased 18%, and the sales of products were in good condition.
Profit forecasting and investment advice. The company's state-owned enterprise reforms have improved quality and efficiency, and are optimistic about business continuity. We expect the company to achieve net profit of 906/10.53/1.95 billion yuan in 2024-2026, an increase of 22.3%/16.2%/13.4% year-on-year, and maintain the “increase” investment rating.
Risk warning: Real estate sales recovery falls short of expectations, weak terminal consumer demand, risk of fluctuating commodity prices, risk of increased market competition, and risk of exchange rate fluctuations.