The company released its 2023 annual report
23Q4 achieved revenue of 1,244 million yuan, +47.3% year over year; net profit to mother of 130 million, +33.7% year on year; net profit without return to mother 120 million, +99.6% year on year;
In '23, revenue was 4.334 billion, +3.5% year on year; net profit to mother was 420 million yuan, -7.3% year over year; net profit after deducting non-return to mother was 390 million, -8.6% year over year.
With overseas customers leaving the warehouse, the company's orders gradually returned to normal starting 23Q2. We expect orders to continue to be strong in 24 years.
Steady revenue from kitchen, bathroom and water purification, and steady development of overseas channels
By product, the company's kitchen and bathroom revenue in '23 was 2.87 billion, +4.3% year on year, gross profit margin 26.1%, year on year +1.3 pct; clean water revenue was 62 million, +5.9% year on year, gross profit margin 26.0%, +2.6 pct year on year; other household revenue was 610 million, -3.1% year on year, gross profit margin of 26.2%, and +3.1 pct year on year.
The company has product, technology, and market pioneering advantages in the field of kitchen and bathroom water purification, and continues to develop overseas channels. Currently, it has established cooperation with stores such as Lowe's, Home Depot, and Hornbach in Germany in some categories; in addition, it is expected that there will be sufficient momentum for revenue growth through cross-border e-commerce to build Jianlin's overseas consumer brand.
Gross margin increased steadily, and net profit margin was affected by exchange
The company's gross profit margin in '23 was 26.0%, +1.7 pct year on year; net profit margin was 9.8%, -1.2 pct year on year. In terms of expenses, sales/management/R&D/finance expenses in 23 were 3.5%/6.0%/5.5%/-0.4%, respectively, compared with +0.4 pct/+0.5 pct/-0.6 pct/+1.8 pct. The decline in net interest rates was mainly due to a decrease in exchange earnings.
Perfect production capacity layout, local services are deeply tied to customer resources
The company has multiple production bases in China, and the Thai factory ensures supply chain security. The second phase in Thailand is expected to be completed in 24Q1;
The US subsidiary strengthens local services, and major customers have exclusive elite service teams to effectively bind high-quality customer resources. In addition, new customers are steadily expanding; we expect that the post-cycle recovery in US real estate will continue to catalyze terminal demand in 24 years.
Adjust profit forecasts to maintain “buy” ratings
The company has been deeply involved in the healthy kitchen and bathroom water purification industry for many years, with outstanding R&D and manufacturing capabilities, an efficient service team, and potential for global market expansion; according to the 23 annual report, and considering that the scale effect of the company's upfront production capacity investment gradually became apparent in 24, the previous base was low, and the impact of the 25-year inventory replenishment gradually weakened. We adjusted the profit forecast. The net profit for 24-26 is estimated to be 48/577 million yuan, respectively (24-25 years ago, the value was 4.51/585 million yuan, respectively). The corresponding PE was 12/10/9x, maintaining the “buy” rating.
Risk warning: customer development falls short of expectations, overseas demand recovery falls short of expectations, interest rate cuts fall short of expectations, industry competition intensifies, etc.