Core views:
The 23Q4 performance was impressive. In '23, the company achieved revenue of 4.334 billion yuan, a year-on-year increase of 3.52%, net profit of 425 million yuan, a year-on-year decrease of 8.63%; in the 23Q4 single quarter, revenue of 1,244 yuan, a year-on-year increase of 47.3%; Q4 net profit of 135 million yuan, a year-on-year increase of 33.7%, net profit after deducting non-return mother increased 99.6% year on year, and achieved a high increase in performance as scheduled. The company's dividend ratio was 46% in '23, maintaining a high level. 23Q4 revenue increased 47% year-on-year, 2.9% month-on-month, and 2.7% increase over 21Q4. Downstream customers went to the warehouse and placed normal orders, and the company gradually introduced new products and new customers, bringing in incremental market space.
Overseas production capacity helped the growth of kitchen and bathroom products, and diversified channels: revenue from kitchen and bathroom products/water purification products/non-household products was 28.70/6.23/207 million yuan respectively, +4.3%/+5.9%/+7.4% year on year. The 23-year old customer inventory replenishment drive the growth rate of various businesses is relatively uniform. In 24, the company's kitchen and bathroom category will focus on strengthening hardware and penetrating large customers. New shower doors and smart toilets are also expected to contribute more. Overseas production capacity has been climbing steadily and put into production, bringing new momentum to the growth of plastics and water purification products. Multiple divisions can be expected to work together to develop customers and promote the company's multi-category development. Looking at regions and channels, retail stores and overseas e-commerce drive continuous growth in North America; the European market expands customers to grow steadily; and based on deep domestic customer development, business and engineering channels are expected to expand.
Profit forecasting and investment advice. Normal orders will resume after overseas downstream warehousing is completed. 23H2-24H1 is expected to maintain a high year-on-year growth rate, and the company is expected to continue to expand after the introduction of new customers and categories, and the implementation of new production capacity. The company continues to iterate products, cultivate electronic control teams to support hardware product innovation, superimpose customer supply stickiness, or achieve category expansion among major customers. Furthermore, the company is cultivating overseas factories such as Thailand, and is expected to accept orders from European and American customers under current supply chain trends. The company is estimated to have a net profit of 50/5.8/660 million yuan in 24-26 years. Referring to comparable companies, considering the company's overseas production capacity expansion, expansion of new categories such as smart toilets, and overseas multi-channel expansion potential, it is given a PE valuation of 16 times in 24 years, corresponding to a reasonable value of 17.8 yuan/share, and a “buy” rating.
Risk warning. Risks such as international political and economic uncertainty, exchange rate fluctuations, and raw material price fluctuations.