Event: On March 28, 2024, Beiding Co., Ltd. released its 2023 annual report. In 2023, the company achieved total revenue of 665 million yuan (-17.33%), net profit of 71 million yuan (+51.92%), and net profit of non-return to mother of 64 million yuan (+59.20%).

2023Q4 revenue performance was under pressure in the short term, and the tableware and drinkware category achieved contrarian growth. 1) On a quarterly basis, 2023Q4 achieved revenue of 193 million yuan (-28.44%) and net profit to mother of 119 million yuan (-6.22%). The revenue performance side was under pressure in the short term. 2) By business, a) Independent brands:

The company's own brand revenue in 2023 was 528 million yuan (-22.23%). Among them, domestic sales revenue was 496 million yuan (-15.54%), and domestic business performance needed to be improved; export sales revenue reached 32.6581 million yuan (-64.68%). The main reason was that the company's own-brand overseas business completely transformed from a business model dominated by direct management and supported by distribution to a business model dominated by distribution and supported by direct management. The adjustment process had a structural impact on revenue. b) OEM/ODM: The OEM business achieved steady growth in 2023 with revenue of 137 million yuan (+9.23%), mainly due to the recovery in inventory levels of the company's main OEM customers. 3) By category, the revenue of the company's own-brand appliances, supplies and foodstuffs reached 364 million yuan (-26.94%) and 166 million yuan (-9.50%) respectively in 2023, of which the tableware and drinkware category revenue was 81.8538 million yuan (+6.87%), achieving contrarian growth.

2023Q4 gross and net margins both increased, and profitability increased significantly. 1) Gross profit margin: 2023Q4 gross margin was 54.54%, +3.40pct year-on-year. The increase was clearly mainly due to the company's strict and careful control of costs. 2) Net interest rate: 2023Q4 net interest rate was 9.85%, +2.34pct year on year. The increase was slightly less than the increase in the cost rate during the main period of gross margin. 3) Expense ratio: 2023Q4 sales/management/R&D/finance expenses were 33.68/7.69/5.67/ -0.03%, respectively, +2.00/+0.71/+2.56/-1.57pct, respectively. Among them, the significant decrease in the financial expense ratio was mainly due to the company's strengthened capital management and an increase in interest income.

The continuous introduction of new products helps diversify the product matrix, and the expansion of private brand offline stores is progressing steadily. 1) Product side: The company has deep insight into user needs. In 2023, it launched various new products such as F51 air fryer, K36 split mini health pot, K1763 and K1563 overseas versions for domestic and foreign markets to meet the diverse needs of consumers and continuously improve the product matrix. 2) Channel side: By the end of 2023, the company has opened 27 offline experience stores in Shenzhen, Shantou and other places. Store expansion is progressing in an orderly manner, and the overall competitiveness of its own brands is expected to further improve.

Investment advice: On the industry side, overseas market demand is gradually picking up, and the small household appliance industry is expected to continue to improve. On the corporate side, it continues to strengthen independent brand building and overseas market development. The offline self-operation experience is complemented by online multi-channel channels to increase user touchpoints, and continuously optimizes cost and expense levels. Revenue and performance are expected to continue to improve. We estimate that in 2024-2026, the company's net profit will be 0.90/1.02/117 million yuan, the corresponding EPS will be 0.28/0.31/0.36 yuan, respectively, and the PE corresponding to the current stock price will be 28.14/24.77/21.60 times, respectively. First coverage, giving a “buy” rating.

Risk warning: price fluctuations and supply risks of major raw materials, risk of exchange rate fluctuations, risk of product quality, risk of market competition, etc.