2023Q4 revenue is under pressure. Long-term focus on improving domestic sales brings profit elasticity. Maintaining a “buy” rating, the company achieved revenue of 9.612 billion yuan (-5.54%), net profit to mother of 389 million yuan (-26.58%), and net profit of 353 million yuan (-35.76%) after deducting non-return net profit of 353 million yuan (-35.76%) in 2023. 2023Q4 achieved revenue of 2,832 billion yuan (-12.92%), net profit attributable to mother of 0.26 million yuan (+0.86%), and net profit after deducting non-return to mother of 0.14 billion yuan (-83.86%). Considering that domestic sales are still under pressure in the short term, we have lowered our 2024-2025 profit forecast and added the 2026 profit forecast. The net profit for 2024-2026 is 4.38/5.00/554 million yuan (original value was 654/743 million yuan), corresponding EPS was 0.57/0.65/072 million yuan, respectively. The PE corresponding to the current stock price is 18.3/16.0/14.5 times, respectively. Domestic sales continue to optimize the product and channel structure, focusing on the profit elasticity brought about by domestic sales improvements and maintaining the “buy” rating.
The increase in export sales led to improvements in small Western-style household appliances. Domestic sales are still under pressure by category in the short term. In 2023, revenue of food processing machines/nutritional cookware/ Western-style appliances/cookware was -10.18%/-0.24%/+2.6%/-33.66% year-on-year, respectively. 2023H2 was -4%/-6%/+23%/-35% year-on-year, the decline in 2023H2 food processing machines narrowed, and Western-style small household appliances resumed double-digit growth (mainly driven by export sales). By region, domestic and overseas revenue in 2023 was $73.7/2.24 billion, respectively, -16.68%/+68.79% year-on-year. 2023H2 was -16%/+86% year-on-year, respectively. According to the related transaction announcement, the sales amount of products to SharkNinja and JS Global Life and its subsidiaries/subsidiary companies as of March 28, 2024 (sales amount of USD 0.2 billion for the same period as of March 31). The total sales amount of daily related products is expected to be no more than US$220 million in 2024 (US$291 million actually occurred in 2023).
Changes in the channel structure disrupted the gross profit margin. The gross profit margin for the whole year improved by 25.86% (-3.22pct) in 2023, and the gross profit margin for 2023Q4 was 27% (-2.84%). In terms of split, domestic/overseas gross margin was -0.95/-0.73 pct year on year in 2023, and 2023H2 was -1.8/-1.1 pct year over year, respectively. The gross margin declined or was due to a change in channel structure. On the cost side, the company's sales/management/R&D/finance expense ratios in 2023 were -0.81/+0.27/+0.21/-0.01pct, respectively, and the 2023Q4 was +1.22/+0.61/+0.3/-0.17pct, respectively. Under the combined influence, the 2023 company's net interest rate to mother was 4.05% (-1.16pct), net interest rate of 3.67% (-1.71pct); 2023Q4 net interest rate to mother 0.9% (+0.14pct), deducted net profit margin of 0.51% (-2.23pct).
Risk warning: raw material prices are rising; industry sentiment continues to weaken; export orders fall short of expectations, etc.