The company released its 2023 annual report, with annual results +13.54% YoY and 23Q4 performance +31.18% YoY. For the full year of 2023, the company achieved operating income of 2,653 billion yuan, a year-on-year decrease of 0.39%, and achieved net profit of 511 million yuan, +13.54% year-on-year; net profit after deducting non-return to mother was 496 million yuan, +21.87% year-on-year. The reason for the slight decline in operating income was due to an increase in sales volume of major products, and a corresponding sharp drop in sales prices due to a sharp drop in shipping costs. In 2023, the company's gross sales margin was 43.5%, +5.71 pct year on year; the net sales margin was 19.26%, +2.4 pct year on year.
The company's sales/management/R&D/finance expenses rates in 2023 were 14.56%/5.67%/2.47%/-2.01%, respectively, +3.18pct/+0.13pct/-0.05pct/-0.67pct. Among them, the sales expenses rate increased significantly year-on-year, mainly due to the increase in the company's exhibition fees, remuneration and warehouse expenses in 2023. 23Q4 achieved revenue of 596 million yuan, +9.49% year over year, and realized net profit of 104 million yuan, +31.18% year over year; net profit without return to mother was 100 million yuan, +40.28% year over year.
The gross margin of major products increased in '23, and the chain market opened up domestic growth. By business, in 2023, the company's commercial food and beverage refrigeration equipment revenue was 1,963 billion yuan, -1.11% year on year, gross margin was 44.92%, year on year +7.05pct; Western kitchen equipment revenue was 451 million yuan, +4.64% year on year, gross margin was 41.43%, year on year +2.32pct; buffet equipment revenue was 159 million yuan, -12.29% year on year, gross margin was 34.6% year on year, +1.73 pct year on year. By sales region, foreign revenue was 2,392 billion yuan, -4.8% YoY, accounting for 90.19% of total revenue; domestic revenue was 229 million yuan, +91.07% YoY, accounting for 8.65%. With the gradual recovery of the domestic restaurant industry and the company's development of the domestic chain market, the company's domestic sales revenue has increased to a certain extent.
Continue to expand overseas warehouse facilities and focus on developing new intelligent products. The company promotes a global market layout, continues to implement construction projects for Britain's own overseas warehouses, and promotes warehouse site selection and construction work in France. By the end of 2023, the company had completed the construction of 31 overseas warehouses. In terms of overseas production capacity construction, construction of the first phase of the 2023 Thai production base plot 2 project has already been completed. The company added a new “intelligent equipment” development strategy. The company's newly developed “smart fries robot” won the 2023 Kitchen Science and Technology Innovation Award and the 2024 Kitchen Science and Technology Innovation Award from the American Catering Association Exhibition.
Investment advice: After years of development, the company has become an influential commercial catering equipment supplier overseas. It benefits from growing demand for overseas catering, actively lays out intelligent products, and can be expected to grow in the future. Net profit due to mother for 2024-2026 is estimated to be 6.65, 8.70, and 1.05 billion yuan, corresponding to 18, 14, and 11 times PE. It has a valuation cost performance ratio and maintains a “buy” rating.
Risk warning: New product development falls short of expectations, global trade patterns deteriorate, and the price of major materials fluctuates.