Description of the event
The company released its 2023 annual report. In 2023, the company achieved revenue of 1,688 billion yuan, a year-on-year increase of 22.16%, achieved net profit of 327 million yuan, an increase of 49.71% over the previous year, and realized deducted non-net profit of 323 million yuan, an increase of 46.18% over the previous year. The company plans to distribute a cash dividend of 3 yuan (tax included) for every 10 shares to all shareholders, with a dividend ratio of 37.04%.
Incident reviews
The growth rate of the company's revenue and net profit to mother increased sequentially in 23Q4. In 2023, the company achieved revenue of 1,688 billion yuan, an increase of 22.16% over the previous year. On a quarterly basis, 23Q1-23Q4 achieved revenue of 2.76, 4.42, 3.97, and 572 million yuan, respectively, with year-on-year increases of 13.34%, 16.68%, 3.16%, and 53.05%. In 2023, the company achieved net profit of 327 million yuan to mother, an increase of 49.71% over the previous year. On a quarterly basis, 23Q1-23Q4 achieved net profit of 0.48, 1.02, 0.88, and 89 million yuan, respectively, up 6.57%, 74.66%, 28.37%, and 92.11% year-on-year. In 2023, the company implemented a development strategy and business plan for online and offline dual-drive development and common growth, which led to a good increase in revenue.
Product sales showed a trend of volume increase and price decline, and self-production of core components helped increase gross margin. By product, in 2023, the company's smart home products and clothes rack products accounted for 85.7% and 12.9% of revenue, respectively. In 2023, smart home products achieved revenue of 1,433 billion yuan, up 26.39% year on year. Among them, sales volume increased by 34.8% year on year, average price -6.2% to 1,116 yuan, and gross margin of smart home products increased 4.84 pct to 53.10% year on year. Clothes drying rack products achieved revenue of 216 million yuan, up 1.58% year on year. Among them, sales volume increased 5.1% year on year, average price -3.3% to 279 yuan, and gross margin of clothes drying rack products increased 6.62 pct to 44.04% year on year. In 2023, the company's gross margin of product sales increased significantly. It was mainly based on the 2022 cost reduction measures. In 2023, the company continued to further promote the implementation of cost reduction and efficiency measures, optimize production processes, and achieve independent production of core components. By channel, in 2023, the company's e-commerce channel revenue was 1.06 billion yuan, up 19.38% year on year, and offline channel revenue was 666 million yuan, up 26.5% year on year. The company's e-commerce channel accounted for 60% of revenue, and gross margin was 53.92%, an increase of 5.45 pcts over the previous year.
In 2023, gross sales margin exceeded 50%, and inventory turnover efficiency improved. In terms of profitability, the company's gross margin increased by 5.0 pct to 51.4% year on year in 2023, and gross margin increased 3.3 pct to 53.0% year on year in 23Q4. In terms of cost ratio, in 2023, the total cost ratio of the company increased by 1.3 pct to 28.2%. Among them, the sales/management/R&D/finance ratio was 20.3%/5.2%/3.1%/-0.5%, compared with +1.66/-0.39/-0.02/+0.05 pct. Under the combined influence, the company's net sales margin was 19.4% in 2023, up 3.6 pct year on year, and the net sales margin increased 3.2 pct to 15.5% in 23Q4. In terms of inventory, as of the end of 2023, the company's inventory was 158 million yuan, a year-on-year decrease of 19.62%. The number of inventory turnover days was 78 days, a year-on-year decrease of 18 days. In terms of cash flow from operating activities, the company's net cash flow from operating activities in 2023 was 504 million yuan, an increase of 287% over the previous period, mainly due to the increase in cash received by the company from selling goods and providing services compared to the previous period, and a decrease in cash from purchasing goods and receiving labor payments compared to the previous period.
Investment advice
In 2023, the company's e-commerce channels and offline channels all achieved rapid growth, and continued to promote the implementation of supply chain cost reduction and efficiency measures. Against the backdrop of falling average product sales prices, the company's gross sales margin level increased significantly, and high-quality growth was achieved throughout the year. Continuing to be optimistic about the increase in the penetration rate of smart home products. As a leader in the smart drying industry, the company is expected to continue to increase its market share by laying out empty markets, developing emerging online channels, and improving the product matrix. The company's 2024-2026 revenue is expected to be 19.95 billion yuan, 23.19, and 2,679 billion yuan, respectively, up 18.2%, 16.3%, and 15.5% year-on-year net profit of 3.89, 4.52, and 523 million yuan respectively, up 19.0%, 16.1%, and 15.8% year-on-year. The closing price on April 23 corresponds to the company's 2024-2026 PE about 15, 13, and 11 times, maintaining the “increase in holdings - A” rating.
Risk warning
Prices of raw materials fluctuated greatly; e-commerce channel expenses increased; competition on smart home racetracks intensified.