Good wife releases 2023 annual report. In '23, we achieved revenue of 1,688 billion yuan, an increase of 22.16% year on year; net profit due to mother of 327 million yuan, an increase of 49.71% year on year, and net profit without return to mother increased by 46.18% year on year. 23Q4 achieved revenue of 572 million yuan, up 53.05% year on year, net profit to mother of 89 million yuan, up 92.11% year on year, and net profit without return to mother increased 110.08% year on year.
Intelligent drying iterates and innovates, and offline sales are growing beautifully. By product, revenue from smart home products in '23 was 1,433 billion yuan, up 26.39% year on year. Smart drying products continued to iterate and innovate; revenue from clothes rack products was 216 million yuan, up 1.58% year on year. By channel, offline revenue increased 37.51% year on year in '23. The company's channel side “broke new ground”, and the divisional division promoted accurate investment to increase the breadth and depth of market coverage, accelerate channel decline, and consolidate and increase market share; e-commerce channel revenue increased 19.38% year on year in '23, maintaining the steady growth of existing platforms and the rapid layout of new platforms.
Profitability increased significantly in 23 years. In '23, the company's gross profit margin was 51.35%, up 5.0 pct year on year, up 19.36% year on year, and 3.6 pct. Among them, the gross margin of smart home/clothes hanger products increased 4.8/6.6 pct year on year, mainly due to sales growth and continuous optimization of production process control costs over 23 years, with remarkable results in cost reduction and efficiency. The 23-year sales/management expense ratio was +1.7/-0.4 pct. The increase in the sales expense ratio was due to the company's increased promotion efforts in offline channels and e-commerce platforms.
Profit forecasting and investment advice. The penetration rate of the smart drying industry continues to increase. As a leader in intelligent drying, the company has outstanding technical research and development capabilities, continuously optimizes product structure, and deepens channel renewal and upgrading. The company is expected to return a net profit of 40/48/550 million yuan in 24-26. Refer to comparable companies, consider the company's card smart home circuit, maintain a judgment on the company's reasonable value of 19.83 yuan/share, corresponding 20 times the 24-year PE valuation, and maintain a “buy” rating.
Risk warning. Risks such as raw material price fluctuations; real estate industry regulation risks; channel changes falling short of expectations; smart home industry penetration rates falling short of expectations; and increased industry competition.