There was some pressure on operations, and profits stabilized in Q4. In 2023, the company achieved revenue of 9.61 billion/ -5.5%, net profit attributable to mother of 310 million/ -26.6%, and net profit of 350 million/ -35.8% after deducting non-return to mother. Among them, Q4 revenue was $2.83 billion/-12.9%, net profit attributable to mother was 0.3 million/ +0.9%, and net profit not attributable to mother was 0.1 million/ -83.9%. The company plans to pay a cash dividend of 1.5 yuan (tax included) for every 10 shares. Affected by the macro environment and the company's channel adjustments, the company's domestic sales were under pressure, and profits declined; Q4 The company's net profit to mother stabilized at a low base.
Export sales grew at an accelerated pace. The company's export sales revenue increased 68.8% to 2.24 billion in 2023, with H1/H2 +49.2%/+85.8% respectively, and the export revenue growth accelerated in the second half of the year. Among them, the company's sales to related parties JS and SharkNinja increased 74.8% year over year to 2.08 billion. According to the related transaction announcement, the company's sales amount to SharkNinja in 2024 is estimated to be US$220 million (the amount generated in 2023 was US$150 million, +50% year-on-year), and sales to JS Global will drop from US$140 million in 2023 to US$0.01.5 billion. It is expected that the collaboration between the company and SharkNinja will continue to grow.
Domestic sales of small kitchen appliances are under pressure, and the company's domestic revenue has declined. According to data from Aowei Cloud Network, retail sales of small kitchen appliances in China fell 9.6% to 54.9 billion in 2023. Among them, retail sales of soy milk machines increased 18.8% to 1.9 billion, retail sales of wall breakers fell 18.3% to 6.3 billion, air fryers fell 46.0% to 4.5 billion, and retail sales of electric rice cookers increased 1.1% to 13.3 billion yuan. The company's strong categories, such as wall breakers and air fryers, declined significantly, driving the company's domestic sales revenue down 16.7% to 7.37 billion in 2023, with H1/H2 -17.0%/-16.4% respectively.
Western-style small household appliances are growing steadily, driven by export sales. The company's revenue for nutritional cookers fell 0.2% to $3.7 billion in 2023, +7.3%/-6.3% for H1/H2; revenue from the food processing machine series fell 10.2% to 2.94 billion, H1/H2 respectively -17.0%/-4.4%; revenue for small Western-style household appliances increased 2.6% to 2.31 billion, H1/H2 respectively -17.1%/+22.7%, which is expected to be driven by export sales in the second half of the year; cookware revenue fell 33.7% to 420 million.
The decline in gross margin was mainly dragged down by the domestic and foreign sales structure. The company's gross margin in 2023 was -3.2pct to 25.9%, of which domestic and foreign gross margin was -1.0/-0.7pct year-on-year to 31.1%/8.6%. The decline in the company's overall gross margin was clearly mainly due to changes in domestic and foreign sales structure. The company's annual expense ratio has been optimized. The cost rate decreased by 0.3 pct to 22.2% during the period, mainly due to a decrease in the sales expense ratio. Q4 The company's sales/management/R&D/finance expense ratios were +1.2/+0.3/-0.2pct to 18.8%/4.8%/4.8%/-0.3%, respectively. The increase in the Q4 sales expense ratio is expected to be related to channel adjustments. In 2023, the company's net profit margin fell 1.2pct to 4.0%, and the Q4 net profit margin increased by 0.1 pct to 0.9%.
Risk warning: raw material prices fluctuate greatly; industry competition intensifies; new product sales fall short of expectations.
Investment advice: Adjust profit forecasts to maintain a “buy” rating.
Taking into account the needs of the domestic small kitchen appliance industry and adjusting the profit forecast, the company's net profit for 2024-2026 is estimated to be 4.8/5.5/62 billion (previous value: 5.9/67/100 million), an increase of 24%/14%/12% over the previous year, corresponding to PE 17/15/13 times, maintaining a “buy” rating.