The company released its 2023 annual report
Achieved revenue of 799 million yuan in '23, -14.2% year on year; net profit attributable to mother of 101 million yuan, -23.2% year on year; net profit after deducting non-return to mother of 89 million yuan, -28.1% year on year;
23Q4 achieved revenue of 221 million, +48.4% year over year; net profit to mother of 0.2 billion yuan, -8.2% year over year; net profit after deducting non-return to mother of 17 million yuan.
Customer product inventory was basically digested, Q4's revenue picked up year on year, and the order situation is expected to be positive in '24.
The category process and customers are actively expanding, and it is expected to regain growth in 24. Looking at products, sports outdoor revenue in '23 was 301 million yuan, -25.0% year over year, gross margin was 32.4%, +2.9 pct year on year; household living income was 425 million, -2.5% year on year, gross margin was 25.5%, or +3.0% year over year.
As a high-level supplier to core customers, the company's share of the original category continues to increase; at the same time, it is actively expanding the manufacturing process. Currently, the home hardware sector has begun shipping, and core sports and outdoor customers are gradually approaching hardware product cooperation; in addition, the company is cultivating or expanding high-quality customers such as MERCADONA, Helen of Troy, Lucky, TARGET, Dengkang Dental (cold acid), and Dr. Bei, which is expected to continue to contribute to growth.
The three bases work together, and the production capacity planning is clear
Currently, the company has three production bases in Xiamen, Shishi, and Malaysia, with production capacity of 1 billion yuan/1 billion yuan/3-5 billion yuan respectively. The production capacity planning level meets the needs of business development in the next few years.
In '23, the first hardware production line at the Shishi Intelligent Manufacturing Base and the Malaysian production base have been put into operation and shipment; the increase in production capacity is expected to increase the company's ability to accept orders and customer response speed, enhance customer stickiness, and further increase market share.
Stable gross margin, depreciation, etc. limit the net interest rate level in the short term
The company's gross margin in '23 was 27.3%, +2.2pct year on year, and gross margin improved; in '23, the company's sales/management/ R&D/ finance ratio was 0.7%/8.6%/5.5%/-0.9%, respectively, +0.2pct/+3.4pct/+1.0pct/ -0.1pct. The net interest rate was 12.7%, -1.5pct year on year. New investment in the Shishi and Malay factories and plant transformation and depreciation led to a rise in the management expense ratio, and the net interest rate declined. With the completion of the climbing phase of mass production and the release of scale effects, profitability is expected to increase.
Adjust profit forecasts to maintain “buy” ratings
The company now has a “dual process (rubber and plastic+hardware)” and “three tracks (sports outdoor, home life and health care)”. Based on the 23-year performance situation, considering capacity expansion and transformation, we expect net profit to the mother for 24-26 to be 1.44/1.84 billion, respectively (the value was 143/179 million yuan 24-25 years ago), and the corresponding PE is 17/13/10x, maintaining a “buy” rating.
Risk warning: risk of raw material price fluctuations, risk of customer expansion falling short of expectations, risk of downstream demand recovery falling short of expected risk