Event: The company publishes its 2023 annual report. During the reporting period, the company achieved revenue of 1,688 billion yuan, +22.16% year over year; net profit to mother of 327 million yuan, +49.71% year over year; and basic earnings per share of 0.82 yuan. Among them, the company achieved revenue of 572 million yuan in a single quarter, +53.05% year-on-year; net profit to mother was 89 million yuan, +92.11% year-on-year.
Increased gross margin led to an improvement in net profit margin, and increased promotion led to an increase in sales expenses.
Gross profit margin: In 2023, the company's comprehensive gross margin was 51.35%, +4.99 pct. Among them, the gross margin for the 23Q4 single quarter was 53.05%, +3.3 pct year over year, and +0.28 pct month-on-month. The increase in gross margin was mainly due to:
1) Sales growth achieved scale effects; 2) Cost reduction and efficiency measures were implemented, production processes were optimized, and costs were reasonably controlled.
Expense rate: In 2023, the company period cost rate was 28.16%, +1.3 pct year-on-year. Among them, the sales/management/R&D/finance cost rates were 20.33%/5.17%/3.15%/-0.48%, respectively, with year-on-year changes of +1.66 pct/-0.39 pct/-0.02 pct/+0.05 pct. The increase in the sales expense ratio is mainly due to the company's increased promotion efforts through offline channels and e-commerce platforms during the reporting period.
Net interest rate: In 2023, the company's net interest rate was 19.36%, +3.55 pct. Among them, the company's net interest rate for the 23Q4 quarter was 15.52%, +3.15 pct year on year, and -6.62 pct month on month.
Omnichannel continues to be deepened, and online and offline collaborative development is being developed. On the offline side, in 2023, the company achieved 666 million yuan, +26.54% year-on-year. The company accelerated channel sinking, deepened the layout of new channels such as hardware stores, new retail, KA, etc., and introduced multi-level full-chain store management standards and digital store terminal systems to strengthen the headquarters's deep empowerment of dealers and improve the quality of terminal retail operations. On the online side, in 2023, the company reached 1,006 billion yuan, +19.38% year-on-year. The company maintained the steady growth of leading e-commerce platforms, accelerated the deployment of new platforms such as Douyin, focused on the cultivation of new categories, and achieved global integration using live streaming, short videos, and KOL promotion as entry points.
Investment advice: The company is a leader in smart clothes dryers, with outstanding comprehensive advantages, leading market share, and broad prospects for omni-channel layout development. The future is expected to fully benefit from increased industry penetration. The company is expected to achieve basic earnings of 1.01/1.21/1.43 yuan in 2024/25/26, corresponding PE of 14X/12X/10X, maintaining the “recommended” rating.
Risk warning: the risk of large fluctuations in raw material prices, the risk of consumer demand falling short of expectations, and the risk of increased market competition.