Incident: The company released its 2023 annual report, and achieved revenue of 2.65 billion yuan in 2023, -0.4% year over year; realized net profit of 510 million yuan, +13.5% year over year. Looking at the Q4 single quarter, we achieved revenue of 600 million yuan, +9.5% year over month, and -17.7% month on month; realized net profit of 100 million yuan, +31.2% year over year, and -24.3% month on month. The company's profitability has improved markedly.
The reduction in shipping freight rates affected the average price of products, and revenue side growth was limited. By product, in 2023, commercial catering refrigeration equipment revenue was 1.96 billion yuan, -1.1% year on year; Western kitchen equipment revenue was 450 million yuan, +4.6% year over year; and buffet equipment revenue was 160 million yuan, -12.3% year over year. By region, in 2023, the domestic business achieved revenue of 230 million yuan, +91.1% year-on-year, mainly due to the gradual recovery of the domestic restaurant industry and the company's smooth development of the domestic chain market; the overseas business achieved revenue of 2.39 billion yuan, -4.8% year-on-year, mainly due to the company lowering overseas product prices in response to lower international shipping prices. By sales model, in 2023, OBM sales revenue was 2.0 billion yuan, -0.8% YoY; ODM sales revenue was 60 billion yuan, +0.4% YoY.
The decline in shipping costs led to a recovery in gross margin, and product expansion led to a year-on-year increase in sales expenses. In 2023, the company's gross profit margin and net margin were 43.5% and 19.3% respectively, +5.7pp and +2.4pp, respectively. The significant increase in gross margin was mainly due to a sharp drop in shipping costs; the cost ratio for the period was 20.7%, +2.6pp, mainly due to an increase in exhibition fees, remuneration and warehouse expenses, and the sales expenses ratio was +3.2pp year over year. Looking at the Q4 single quarter, gross profit margin and net margin were 48.7% and 17.5%, respectively, +7.2pp and +3.1pp, respectively, and +4.3pp and -1.5pp, respectively; the cost ratio for the period was 26.3%, +4.1pp, and +4.0pp. The company's intelligent warehousing program continues to advance, inventory management and cost management capabilities continue to be strengthened, and cost control and profitability are expected to be further improved.
Further promote market globalization and lay out intelligent kitchens to open up a second growth pole. In terms of globalization, in terms of overseas marketing network upgrading projects, the company continues to implement the UK's own overseas warehouse construction project and promote the French warehouse site selection and construction work. The first phase of the Thai production site project has already been completed. Up to now, the company has completed the construction of 31 overseas warehouses. In terms of intelligent cooking, the company's new products were successfully promoted in the US market. The “Smart French Fries Robot” and “Automatic French Fries Packing Machine” won scientific and technological innovation awards from the US Catering Association in 2023 and 2024 respectively. The company insists on independent development and continues to expand its product categories. It is expected to enter chain catering channels through intelligent products such as “universal steaming ovens” and “smart french fries robots” to open up new space for growth.
Profit forecasting and investment advice. The company's net profit due to mother in 2024-2026 is estimated to be 6.5, 8.2 million yuan, and 960 million yuan respectively, corresponding to EPS of 1.55, 1.95, and 2.29 yuan, respectively. Corresponding to the current share price PE is 18, 14, and 12 times, respectively. The compound net profit growth rate for the next three years will be 24%. The company has a perfect global layout and is actively promoting new intelligent food products. It is expected to benefit from the recovery of the domestic and foreign catering industry. The company will be given a target PE of 22 times in 2024, with a target price of 34.10 yuan for the first time, and a “buy” rating.
Risk warning: Risks such as new product expansion falling short of expectations, overseas market expansion falling short of expectations, and exchange rate changes.