Incident: Zhejiang American University released its 2023 annual report and 2024 quarterly report. The company achieved revenue of 1.67 billion yuan in 2023, YoY -8.8%; realized net profit to mother of 460 million yuan, YoY +2.7%. In the 2023Q4 quarter, the company achieved revenue of 410 million yuan, YoY -5.7%; realized net profit to mother of 100 million yuan, YoY +26.9%. 2024Q1 achieved revenue of 270 million yuan, YoY -19.4%; realized net profit to mother of 80 million yuan, YoY -23.3%.
The company announced a profit distribution plan. It plans to distribute a cash dividend of 7.50 yuan (tax included) for every 10 shares, for a total of 480 million yuan, with a dividend rate of 104.4%. Due to delays in real estate sales, the number of new housing deliveries declined, and the company's sales declined from 2023Q4 to 2024Q1.
US University's revenue declined in Q1: We believe that the company's 2024Q1 revenue declined mainly due to fluctuations in the third- and fourth-tier real estate boom in the previous period, and delays affected integrated stove sales. Looking at Q1 sub-channels, we estimate that dealer channel revenue growth is better than the overall rate, and other channels are more affected by fluctuations in industry sentiment. We expect that the industry will continue to be affected by delays in real estate sales in the early stages, but the US University has an advantage in distribution channels, and its performance may be better than the industry as a whole.
The company's Q4 gross margin increased: According to the announcement, US University's gross margin for 2023Q4 to 2024Q1 was +3.8pct/-0.8pct year-on-year, respectively. We believe that the main reason for the increase in US Q4 gross margin was that raw material prices were lower than the same period last year. Due to increased competition in the industry, the company's Q1 gross margin declined slightly.
Meida has a channel advantage: According to the company's announcement, in 2023, the company added 16 new first-level dealers and 200 new marketing terminals. In total, it has more than 2,000 first-level dealers and more than 4,700 marketing terminals. In terms of channel strength, the company has a large number of large merchants, and high-quality dealers are beneficial to the company's development. American University also grants credit periods to some well-qualified dealers to support channel growth.
Investment advice: In the long run, as a pioneer and leader in the domestic integrated stove industry, the US University will benefit from the rising popularity trend of integrated stoves, and its own brand and channel construction will also help the company consolidate its existing advantages. We expect the US University's EPS for 2024-2025 to be 0.74/0.75 yuan respectively, maintaining a buy-A investment rating. The target price for 6 months is 11.84 yuan, which corresponds to a dynamic price-earnings ratio of 16 times in 2024.
Risk warning: Real estate sentiment fluctuates, industry competition deteriorates, raw material prices rise