Introduction to this report:
The slow recovery in industry demand and adjustments in the company's distribution management strategy and team put pressure on the company's H2 performance. It is expected that with the end of the adjustments, operations are expected to return to the right track, and performance is expected to pick up.
Key points of investment:
Considering that demand in the industry is slowly recovering weakly and competition is relatively intense. We lowered 2024-2025 and added a profit forecast for 2026. The company's 2024-2026 EPS is expected to be 1.11/1.20/1.28 yuan (2024-2025 original value 1.23/1.39 yuan, amplitude modulation -11%/-16%), +8%/+7% year-on-year. Referring to comparable companies in the same industry, we gave the company 16x PE in 2024, and lowered the target price to 18 yuan to maintain the “gain” rating.
Performance summary: The company's Q4 performance was slightly lower than expected. The company's 2023 revenue was 831 million yuan (-12%), and the performance was 190 million yuan (-12%); of these, 2023Q4 revenue was 207 million yuan (-13%), and the performance was 50 million yuan (-19%).
There has been a decline in the category of integrated stoves, and there has been a high increase in the category of non-integrated stoves. By product, in 2023, the company's integrated stove product revenue was 720 million yuan, -16% year over year, other kitchen supplies revenue was 63 million yuan, +54% year over year, and wooden cabinet revenue was 39 million yuan, +32% year over year. The average price of the integrated stove category is high, increasing the purchasing threshold for consumers. As consumer purchasing power slowly recovers, overall sales are relatively sluggish. The cumulative sales volume/sales/average price of 2023Q4 integrated stoves online were -18%/-13%/-6%, respectively, and the company's revenue performance was in line with the overall level of the industry. At the performance level, 2023Q4 gross margin was -3 pct year over year, and net margin was -2 pct year over year. We expect that in a competitive market environment, changes in the company's product structure will be an important reason for the decline in Q4 gross margin. The sales, management, R&D, and financial expense ratios for the Q4 quarter were -5, +0.3, +1, and +0.4 pct, respectively.
Looking ahead to 2024, as one of the leaders in the integrated stove industry, the company has a relatively mature channel layout, and the overall performance is expected to outperform the industry as a whole.
Risk warning: There is a risk of fluctuations in raw material prices and increased market competition.