Incident: The company released an annual report and achieved operating income of 11.67 billion yuan, an increase of 3.9%; net profit to mother of 1.26 billion yuan, an increase of 18.5%, a net interest rate of 10.8% to mother, an increase of 1.3 pct; net profit after deducting non-return to mother of 1.13 billion yuan, an increase of 21.1%, net profit of 9.7% of non-return to mother, an increase of 1.3 pct. Looking at a single quarter, 23Q1-Q4 achieved revenue of 18.0/29.4/3.46/3.47 billion yuan respectively, a year-on-year change of -9.7%/+5.6%/+9.6%/+5.4%; net profit to mother of 1.0/4.0/4.5/310 million yuan, a year-on-year change of -9%/+33%/+16%/+18%.
The consolidated gross margin for '23 was 36.2%, up 3.2pct. The cost rate for the period was 20.3%, a decrease of 0.2 pct. Among them, sales/management/R&D/finance expenses were 9.7%/6.6%/3.5%/0.5%, respectively, with year-on-year changes of -0.2pct/-0.2pct/+0.3pct/-0.1pct. The 23Q4 consolidated gross margin was 37.4%, up 4.1pct from the same period. The cost rate for the period was 19.6%, a decrease of 1.7 pct. Among them, sales/management/R&D/finance expenses were 9.2%/6.6%/3.3%/0.4%, respectively, with year-on-year changes of -0.9pct/-1.0pct/+0.2pct/0.0pct.
Adhering to the multi-brand & all-category strategy, customer unit prices continue to rise. By brand, the Sophia brand achieved revenue of 10.55 billion in '23, an increase of 11.0% over the same period. The average customer unit price at Sophia's factory side was 19,600 yuan, an increase of 6.3% over the same period. The Milana brand achieved revenue of 470 million yuan, an increase of 47.2% over the same period. The average customer unit price at the Milana factory was 13,900 yuan, an increase of 6.6% over the same period. The Huahe brand achieved revenue of 160 million yuan, a decrease of 3.6%. By product, wardrobe and ancillary products/cabinets and accessories/wooden doors/other businesses achieved revenue of 94.1/12.4/5.9/420 million yuan respectively in 23 years, a year-on-year change of +2.5%/-2.2%/+35.7%/+24.4%, accounting for 80.7%/10.7%/5.0%/3.6%.
Build an omnichannel marketing system, with national coverage and overseas expansion in parallel. By channel, dealer stores, direct stores, bulk businesses, and other channels achieved revenue of 96.3/3.1/14.5/270 million yuan in 23 years, a year-on-year change of +4.4%/+13.6%/-4.9%/+39.4%, accounting for 82.5%/2.7%/12.4%/2.3%. By region, South China/East China/North China/Northeast China/Southwest/Northwest/Central China/Central China/Overseas respectively achieved revenue of 22.1/24.9/26.7/7.3/14.2/9.1/9.6/0.5 billion yuan, a year-on-year change of -9.1%/-3.5%/+10.6%/+19.1%/+3.6%/+34.6%/+34.6%/+3.6%/+42.9%, accounting for 19.0%/21.4%/22.9%/6.3%/12.2%/7.8%/8.3%/0.4%.
Profit forecast and rating: We expect net profit for 24-25 to be 1,46/1.66 billion yuan, up 15.9%/13.6% year on year, and PE corresponding to the current closing price is 10.6/9.3 times. As a leading custom furniture company, the company is actively expanding. Referring to comparable companies, PE valuation is 13-15 times in 24 years, corresponding to a reasonable value range of 19.73-22.77 yuan, giving it a “superior to the market” rating.
Risk warning: Terminal demand falls short of expectations, risk of declining real estate sales area growth, risk of category and channel expansion falling short of expectations, high raw material prices.