Incident: The company released its 2023 annual report on April 16. Total operating revenue in 2023 was 2,653 billion yuan, -0.39% year over year; net profit to mother was 510 million yuan, +13.54% year over year.
Performance is basically stable, and product serialization+equipment intelligence continues to advance. In 2023, performance remained stable. The reason for the slight decline in revenue was due to an increase in sales volume of major products, and sales prices were lowered accordingly due to a sharp drop in shipping costs. By product, commercial catering refrigeration equipment revenue was 1.963 billion yuan, -1.11% YoY; Western kitchen equipment revenue was 451 million, +4.64% YoY. By region, the domestic business achieved revenue of 229 million, +91.07% year-on-year; the overseas business achieved revenue of 2.392 billion yuan, -4.80% year-on-year.
By sales model, OBM sales revenue was 2.05 billion yuan, -0.80% YoY; ODM sales revenue was 602 million, +0.39% YoY. The company will promote “product serialization” and “intelligent equipment” as the company's two core strategies. The “smart french fries robot” and “automatic french fries packing machine” won scientific and technological innovation awards from the 2023 and 2024 American Catering Association exhibitions respectively.
Shipping price cuts have led to a recovery in gross margin, and product development has led to an increase in cost rates. In 2023, the company's gross margin was 43.50%, +5.71 pct. Mainly due to falling shipping costs, the gross margin level returned to the epidemic. Q1-Q4 gross margin was 40.1%/41.22%/44.37%/48.67%, respectively, and continued to rise quarter by quarter; the cost ratio for the period was 20.69%, +2.59pct, of which the sales expense ratio was 14.56%, the same +3.18pct, mainly due to the sharp increase in the company's exhibition fees, remuneration and warehouse expenses in 2023; the management expenses ratio was 5.67%, yoy + 0.12pct; R&D cost rate 2.47%, -0.04pct year on year; financial cost ratio -2.01%, -0.68pct year on year.
Independent brand+overseas market to promote the steady growth of the company. The company uses “brand autonomy” as its sales strategy, giving full play to the advantages of existing overseas sales channels and continuously increasing the market share of its own brands.
In recent years, independent brands have accounted for more than 70% of sales revenue, and the sales volume and brand influence of brands such as ATOSA in the international market have also increased year by year. Under the influence of the “market globalization” strategy, the company continues to develop overseas markets, accounting for about 90% of export sales. Among them, demand in the US market is strong, and it will continue to explore the Thai, English and French markets, and promote the company's steady growth through new product layout, production base construction, and overseas channel improvement.
Investment advice: As a domestic manufacturer that first established its own brand and entered foreign markets, Yindu Co., Ltd. is deeply involved in the catering market. The company closely focuses on the four major strategies of “brand autonomy,” “market globalization,” “product serialization,” and “equipment intelligence” to steadily advance various business activities. Newly developed products have received international recognition, and future development space can be expected. For the first time, coverage was given a “gain” rating. We expect to achieve net profit of 6.64, 7.96, and 927 million yuan in 2024-2026, EPS of 1.58, 1.89, 2.20 yuan, and PE of 18.1, 15.1, and 13.0 times.
Risk warning: Steel and exchange rate fluctuations exceed expectations, increased competition in overseas markets, inventory management risks, and risks in the company's distribution model.