occurrences
The company released its 2023 annual performance report: In 2023, the company achieved operating revenue of 1,616 billion yuan, an increase of 11.68% over the previous year; the corresponding net profit was 173 million yuan, an increase of 164.02% over the previous year. As of December 31, 2023, the company's cash and equivalents in hand was $2,901 billion; the company's dividend payout ratio in 2023 was 80%, and continued to maintain a high dividend ratio during the operating period.
Home care is growing steadily, and the proportion of online channels remains stable
By business, for the full year of 2023, the company's home care/personal care/pet and pet products business had revenue of 14.72/0.61/0.77 billion yuan respectively, up and down 13.49%/-4.55%/0.47%, respectively. Among them, home care achieved steady growth throughout the year. By channel, the company's online channels (online stores, online distributors, community e-commerce platforms) /offline channels (offline distributors, corporate and group customers, overseas distributors, LiBai channels, and OEM services) had revenue of 550 million yuan in 2023, an increase of 10.70%/12.19%, respectively.
Profitability benefited from category structure optimization and supply chain reform. The annual rate optimization in 2023 was 44.46%/10.70%, with year-on-year increases of 2.89/6.17pct, mainly benefiting from category structure optimization and supply chain reform. Among them, the gross margins of home care/personal care/pet and pet products were 44.99%/40.33%/43.22%, respectively, with year-on-year changes of +3.13/+3.91/-0.99pct, respectively. In terms of period expenses, the company's sales and distribution expenses/administrative expenses accounted for 26.31%/11.64% of revenue for the year, respectively, with year-on-year changes of -3.78/+0.31pct; financial costs for the same period accounted for 0.06%, which remained stable year-on-year.
Home care is the basic market, and the pet sector actively lays out to build a moat home care business segment. While maintaining the leading brand of insecticidal, mosquito repellent and household cleaning products (the company's insecticidal and mosquito repellent products have occupied the first place in the domestic market for many years), it has launched differentiated products and created a variety of high-margin products. In terms of pet business, since entering the pet sector, the company has continuously strengthened the upstream supply chain and downstream channel distribution capabilities for pet products, food, and health products. It has successively laid out cat litter factories, Shandong Shuaike, Zhongbo Luya, etc. through strategic cooperation and equity investment, and gradually developed omni-channel collaborative development from online channels to pets, investing in Claw Technology and Shenzhen Mileyun to launch an offline thousand store plans. In the future, the pet circuit will drive the company's performance growth.
Investment advice and profit forecasting
On the product side, we are optimistic about the vast growth space brought by the company's entry into the pet industry; on the channel side, we believe that the company's omni-channel coverage strategy, which goes hand in hand with online and offline, is expected to achieve multi-dimensional growth. The company's revenue for 2024-2026 is estimated to be 1,788/19.37/2,083 billion yuan, respectively, net profit to mother of 1.83/1.95/210 million yuan, corresponding EPS 0.14/0.15/0.16 yuan/share, respectively, and the current stock price corresponding to PE is 11.46/10.80/10.02, respectively. Give it a “buy” rating.
Risk warning
Risk of increased competition in the industry, risk of rising raw material prices, risk of inventory backlog for sales and distributors