Incident: The company released its 2023 annual report. In 2023, the company achieved revenue of 24.25 billion yuan, an increase of 19.9%; net profit to mother of 740 million yuan, an increase of 203 percent over the previous year; after deducting non-net profit of 750 million yuan, an increase of 629.4% over the previous year. Looking at a single quarter, Q4 achieved revenue of 5.08 billion yuan, an increase of 5% year on year; net profit to mother of 240 million yuan, up 194.2% year on year; net profit after deducting 240 million yuan to mother, an increase of 869.6% year on year.

The company's cash dividend rate increased in 2023, with a cash dividend of 310 million yuan. The cash dividend ratio reached 41.7% of the profit for the full year of 2023.

Various sectors are growing rapidly, forming a comprehensive integrated home appliance brand. By product, the company achieved revenue of 11.57 billion yuan/9.09 billion yuan/1.33 billion yuan/1.85 billion yuan/1.85 billion yuan in 2023, respectively, up 18.2%/18.6%/76.4%/15.2% year-on-year. The company's various businesses have achieved relatively rapid growth. Collaboration between various business industries has been strengthened, collaboration with the parent company Black Electric has increased, and the company's integration capabilities have been enhanced, and it has gradually grown from a traditional refrigerator company to a comprehensive home appliance brand.

The gross margin has remained stable, and the cost ratio has been declining steadily. The company's gross margin increased by 0.2pp to 13.9% year-on-year in 2023, with gross margins of air conditioning/refrigerators being 8.9%/19.1%, respectively, and -1.4pp/+1.9pp, respectively.

In terms of cost ratios, the company's sales/management/ financial/ R&D expenses in 2023 were 6.5%/1.5%/-0.5%/2.5%, respectively; in terms of net interest rates, the company's net interest rate increased by 1.8 pp to 3.2% year on year in 2023, and the company's gross margin remained relatively steady, mainly due to increased internal efficiency, all expense ratios declined, and overall profitability improved.

Export sales are growing rapidly, and there is a global multi-business layout. At a regional level, the company's domestic and foreign sales achieved revenue of 16.66 billion yuan/7.58 billion yuan respectively, an increase of 10.8%/46.5% year-on-year, respectively. The company's export business grew significantly, while the gross profit margin of export sales was 13.2%, up 0.9PP over the same period last year. The company's export business is mainly in developing countries, and the market space is broad, and it is expected that it will continue to grow rapidly in the future.

Profit forecasting and investment advice. The company implemented the “one goal, three main lines” business policy in 2023, and achieved good operating results in its main business, air conditioning, refrigerators, washing machines, kitchen and bathroom. The company's 2024-2026 EPS is expected to be 0.87 yuan, 1.03 yuan, and 1.15 yuan respectively, maintaining a “buy” rating.

Risk warning: Risks such as falling short of expectations in export sales growth, falling short of expectations in consumption, and increased competition.