Key points of investment
Product price cuts led to a slight year-on-year decline in revenue. We are optimistic that the revenue side will recover in 2024. In 2023, the company will achieve operating income of 2,653 billion yuan, -0.39% year over year. Of these, Q4 achieved revenue of 596 million yuan, +9.49% year over year. By product: 1) Commercial catering refrigeration equipment: achieved revenue of 1,963 billion yuan in 2023, of which sales volume was 310,700 units, +12.60% year over year, with a slight decline in revenue mainly due to product price cuts; 2) Western kitchen equipment: achieved revenue of 451 million yuan in 2023, +4.64% year over year, of which sales volume was 121,500 units, +4.36% year over year. The unit price remained stable. By region: 1) Domestic sales: achieved revenue of 229 million yuan in 2023, +91.07%; 2) Export sales: achieved revenue of 2,392 billion yuan in 2023, -4.80% year over year. The sharp increase in domestic sales was mainly due to the company receiving large orders from a domestic catering customer in 2023. The slight decline in export sales was mainly due to a sharp drop in shipping costs in 2023, and product prices were reduced accordingly. By sales model: 1) OBM: achieved revenue of 2,005 billion yuan in 2023, -0.80% year over year; 2) ODM: achieved revenue of 602 million yuan in 2023, +0.39% year over year. Looking ahead to the full year of 2024, the company's revenue side is expected to usher in restorative growth as demand recovers in Europe and the US, the negative factors in product price dissipation, and combined with the release of new products such as universal steamer ovens and ice cream machines.
Benefiting from the reduction in shipping costs and the impact of exchange rates, profitability increased markedly. In 2023, the company achieved net profit of 511 million yuan, +13.54% year over year, of which Q4 was 104 million yuan, +32.86% year over year. In 2023, the company's net sales margin was 19.26%, +2.40pct year-on-year, and the profit level increased significantly. 1) Gross profit side: The gross margin of sales in 2023 was 43.50%, +5.72pct year on year, which is the main reason for the increase in net margin. Among them, the gross margin of export and domestic sales was 45.28% and 30.26%, respectively, +6.88pct and -2.16pct, respectively. The sharp increase in gross margin of export sales was mainly due to a significant decrease in shipping costs. 2) Expense side: The cost rate for the 2023 period was 20.69%, +2.59pct. Among them, sales, management, R&D and finance expenses were +3.18pct, +0.12pct, -0.04pct, and -0.68pct, respectively. The increase in sales expenses was mainly due to a sharp increase in exhibition expenses over the same period last year, increasing domestic and foreign market development efforts.
The ever-improving overseas channels+new product layout will drive the company to continue to grow steadily. Compared with Japanese companies such as Hoshizaki and Middleby, the company's revenue scale is small, and there is still plenty of room for improvement. ① Overseas channels tend to improve: The company's domestic and foreign channel construction is basically complete. In particular, overseas channels tend to improve, and it is actively penetrating engineering customers at home; ② New product layout: launching new intelligent products such as universal steaming ovens and smart french fries robots will effectively complement the company's product matrix and is expected to become a new growth point for the company's performance. Among them, the company's french fries robot was upgraded and iterated, and an automatic packing function was added, and received the 2024 Kitchen Science and Technology Innovation Award from the American Catering Association, which is more in line with customer needs; ③ Production capacity: The commissioning of the Thai production base will further meet the company's overseas business development needs, facilitate the company's international market development, optimize the company's production capacity and transportation integration capabilities, and reduce policy risks caused by a single exporting country.
Profit forecast and investment rating: Considering the recovery process of overseas consumer demand, we lowered the company's 2024-2025 net profit forecast to 6.65/808 million yuan (original value of 703 million yuan and 853 million yuan), and added the 2026 net profit forecast of 956 million yuan, corresponding PE of 17/15/12 times, maintaining the “increase” rating.
Risk warning: geopolitical risk, risk of rising sea freight rates, overseas market expansion falling short of expectations