Key points of investment:
The 23-year results were under pressure, and the dividend ratio increased. The company released its 2023 annual report, achieving a total operating income of 1,227 billion yuan, -3.80% year on year, net profit attributable to shareholders of listed companies of 179 million yuan, -14.64% year on year, and realized net profit of 165 million yuan after year, or -6.00% year over year; of these, Q4 achieved revenue of 283 million yuan in a single quarter, -9.56% year over year, and achieved net profit of 0.4 billion yuan, -91.87% year over year. Both revenue and performance performance fell below our previous expectations in the performance outlook. In the same period, the company announced the 23-year profit distribution and capital transfer plan. It plans to distribute cash dividends of 10.0 yuan (tax included) for every 10 shares to all shareholders, with a total cash dividend of about 105 million yuan, accounting for about 59% of the current profit for 23 years, a further increase from the previous dividend ratio of about 30%. At the same time, the company plans to transfer 3 shares for every 10 shares to all shareholders.
Demand in the integrated stove industry is weak, and the company operates meticulously across all channels. At the industry level, according to Aowei Cloud Network (AVC) summary data, the retail sales volume of the integrated stove market reached 24.9 billion yuan in 2023, down 4.0% year on year; achieved retail sales volume of 2.78 million units, down 4.2% year on year; retail sales volume and value of large kitchen appliances just needed in Q1 24 reached +4.4%/+5.8% year on year, respectively, reached 14.58 million units/19.4 billion yuan. The retail volume of integrated stoves reached 2.91 million units/7.8 billion yuan year on year, while retail sales volume of integrated stoves reached 2.91 million units/7.8 billion yuan year on year, respectively. 5% /- 11.9% reached 450,000 units/4.2 billion yuan. The overall growth rate of the industry slowed, and demand weakened slightly. At the company level, the annual revenue ratio was -3.80%, and the performance was slightly better than the industry's retail market. Through active integration of resources, omni-channel collaborative development was accelerated: in terms of distribution channels, by the end of 23, the company had more than 1,500 dealers, covering 31 provinces (autonomous regions and municipalities directly under the Central Government); in terms of e-commerce channels, the professional team refined the operation of multiple online channel systems, and platform e-commerce, content e-commerce, and social e-commerce went hand in hand; in terms of new retail business, the company followed the sinking market, added service outlets, and entered JD Home Appliance, Tmall Premium, and Wupin Xingwanzhentong, Gomeixin Channel outlets such as retail have sunk to further expand market coverage.
Gross margin was optimized year over year. The company achieved a gross sales margin of 48.66% in '23, +2.04pcts year over year. We expect this is mainly due to factors such as the year-on-year decline in raw material prices and product structure optimization. In terms of the expense ratio for the period, the company's sales expense ratio for 23 was 23.51%, +1.16 pcts year over year; the management expense ratio was +2.43 pcts to 6.15% year over year, mainly due to increased depreciation expenses after the company's fund-raising project was consolidated; the financial expense ratio was -1.54%, a slight increase of 0.05 pcts year on year, and finally recorded the company's net interest rate of 14.59% for 23 years, -1.85 pcts year on year.
Maintain an “overweight” investment rating. Considering the short-term pressure on industry demand, we lowered the company's 24-25 profit forecast (previous value was 298/355 million yuan) and added a 26-year profit forecast. We expect to achieve net profit of 2.01/2.21/241 million yuan in 24-26 years, +12.3%/+9.7%/+9.1% year-on-year, corresponding to current price-earnings ratios of 16/14/13 times, respectively. Referring to the comparable company Martian's 24-year PE, there is still plenty of room for improvement, maintaining a “gain” investment rating.
Risk warning: the risk that real estate data is sluggish and demand falls short of expectations; industry competition increases risk; risk of fluctuating raw material prices.