Incident: The company announced its 2023 annual report. In 2023, the company achieved revenue of 4.712 billion yuan, a year-on-year increase of 14.43%, and achieved net profit of 445 million yuan, an increase of 15.24% over the previous year; in the fourth quarter, the company achieved revenue of 1,394 million yuan, a year-on-year decrease of 1.79%, and realized a net profit of 130 million yuan, a year-on-year decrease of 11.13%.
Domestic sales bucked the trend, and export sales showed outstanding performance. In terms of revenue by region, the company's domestic and foreign sales achieved revenue of 43.42/370 billion yuan respectively in 2023, up 10%/106% year on year. Under the relatively weak domestic market (Aowei Caliber's retail scale of small kitchen appliances fell 10% year on year), the company's domestic sales bucked the trend and achieved steady growth; at the same time, the company gradually began to expand its accumulated domestic brands, products and manufacturing advantages to overseas markets, and overseas business achieved rapid growth. In terms of revenue categories, in 2023, the company achieved revenue of 36.44/4.85/546 billion yuan respectively, with year-on-year increases of 8%/23%/68%, respectively. Small kitchen appliances grew steadily, and small household appliances and personal care and mother and child products performed well. Revenue of small kitchen appliances such as cooker/electric cookers and kettles increased 20%/18%/13% year over year, respectively. It is estimated that high-demand categories such as rice cookers, electric pressure cookers, electric kettles, juicers, and wall breakers contributed mainly to the increase.
Gross margin was under pressure in the fourth quarter, and the sales expense ratio declined markedly year over year. The company's gross margin for the fourth quarter was 31.83%, down 5.9pct from the previous year. It is estimated that the company increased its product promotion efforts against the backdrop of weak demand and increased competition in the industry. The company's expense ratio during the same period was 21.14%, down 4.8pct year on year. Among them, the sales expense ratio and management expense ratio decreased by 3.2 pct and 1.1 pct, respectively, and the cost control effect was outstanding. The company's net profit margin for the fourth quarter was 9.31%, down 1.0 pct year on year.
A new brand IP was released, and the company began to move towards becoming a leading global small home appliance company. The company held its 18th anniversary celebration and new product launch on March 27. At the same time, it announced a new brand goal — “Determined to become the world's leading small home appliance company” and continue to expand its global business map. In addition to the Southeast Asian market that has already been laid out, the company will also develop market development strategies for waves of development for overseas markets such as North America, Southeast Asia, the Middle East, and Europe, gradually establish an omni-channel industrial chain, promote the localized operation of multiple brands, and steadily expand its market share. At the same time, the company also released a new IP brand image and flagship product suite, highlighting the brand characteristics centered on user needs.
Appropriately adjusting the small household appliance business growth rate assumptions and expense ratio assumptions, we expect the company's net profit to be 4.92/5.49/606 million yuan respectively in 2024-2026 (previously predicted 2024-2025 was 519.612 million yuan), and the corresponding EPS was 3.14/3.50/3.86 yuan, respectively. Referring to the comparable company valuation method, the company was given a price-earnings ratio valuation of 19 times in 2024, corresponding to a target price of 59.66 yuan, maintaining the “gain” rating.
Risk warning
The risk of category innovation falling short of expectations; the risk of increased industry competition; the risk of a sharp rise in raw material costs.