Incident: The company released its annual report. In 2023, it achieved revenue of 1.78 billion yuan, +41% year on year, net profit to mother of 410 million yuan, +74% year on year; of these, 2023Q4 revenue in a single quarter was 550 million yuan, +29% year over year, and net profit to mother was 160 million yuan, +52% year over year. The net profit margin for 2023 was 26.6%, +5pct year on year, of which 28.9% in Q4 in a single quarter, +4.3pct year on year.
The release of production capacity increases the ability to take orders. In 2023, the company produced a total of 38.8852 million metal warmers, an increase of about 6.41 million compared with 2022, +20%; the planned annual increase in production capacity for 2024-2027 is 550/705/690/4.05 million, respectively, and the total production capacity is expected to reach 49.5 million in 2027. The company has a forward-looking layout of overseas production capacity. As the Vietnamese base is gradually put into use, the ability to accept orders is expected to be further improved, while meeting customer demands to diversify supply chain risks and deepening ties with leading customers.
Product structure optimization and large-scale production help increase profit levels. In 2023, the average price of the company's products was about 45.25 yuan/piece, with a year-on-year ratio of +19%. The sales revenue ratio mainly increased steadily from 31.59% in 2020 to 74.45% in the first three quarters of 2023, and the product structure continued to be optimized; the large single product model is conducive to giving full play to the advantages of automated production lines, compounding the company's product process with more complex processes and higher added value, leading the company's gross margin industry, reaching 40.7% in 2023, +6.5 pct year on year.
Participation in outdoor activities has increased, and superimposed scene segmentation puts forward differentiated requirements for product characteristics, leading to an increase in consumption frequency. Since 2021, both the US outdoor sports participation rate and number of campers have increased rapidly, driving the demand for outdoor products such as thermos cups. In addition, diversified scenarios drive products to be more segmented in terms of capacity, volume, materials, etc., and diversification of consumption scenarios drives continued growth in market size.
Product consumption attributes are getting stronger, and repurchase rates and product premiums are increasing. Thermoses are gradually changing from “functional” products to “consumer” products. Brands continue to launch new designs and co-branded products. Among them, limited-edition models even have some collectible value. Multiple dimensions stimulate terminal demand and speed up product replacement. The product repurchase rate has increased dramatically, so that thermos mugs can smooth seasonal and cyclical effects to a certain extent on the consumer side, showing the characteristics of FMCG products.
Profit prediction and rating: As leading brands increase their promotion efforts, enhance brand influence, increase downstream customer concentration, and drive increased supplier concentration, we are optimistic that the company will further bind major customers and steadily expand production capacity to lay the foundation for scale growth. The company's net profit to the mother in 2024-2026 is estimated to be 583 million yuan, 725 million yuan, and 884 million yuan respectively. The PE corresponding to the current stock price is 12x/10x/8x, maintaining the “recommended” rating.
Risk warning: Overseas terminal sales fall short of expectations; raw material price fluctuations; risk of exchange rate fluctuations, etc.