Revenue is recovering quarterly, and the growth rate is expected to rise in 24, maintaining the “gain” rating
The company achieved revenue of 3,538 billion yuan (yoy -12.75%) and net profit of 298 million yuan (yoy -11.14%), slightly higher than our previous expectations (286 million yuan), after deducting non-net profit of 209 million yuan (yoy -13.82%). Among them, Q4 revenue also increased 19.7%, a significant improvement over Q3 (yoy -1.4%).
In addition, 24Q1 achieved revenue of 857 million yuan (yoy +22.96%), net profit to mother of 43 million yuan (yoy -17.47%), and deducted non-net profit of 43 million yuan (yoy +21.60%). Considering the recovery in demand, we slightly raised our revenue forecast. At the same time, considering the increase in cost investment and the sales expense ratio forecast, we expect net profit to be 3.30/4.05/471 million yuan for 24-26 (the previous 24-25 year value was 3.48/412 million yuan), corresponding EPS was 0.99/1.22/1.42 yuan. Referring to the 24-year Wind of comparable companies, the average PE value is 12 times, taking into account the steady recovery in the company's demand and the rapid growth of our own brands, and the target price is 14.85 times PE in 24 years. Yuan (previous value: 12.60 yuan), maintaining the “gain” rating.
Overseas channel inventory continues to decline, and export demand for office chairs ushered in improvements by product category. Revenue from office chairs/sofas/massage chairs decreased by 7.86%/34.36%/32.23%/17.97% year-on-year to 25.6/5.4/2.4/0.3 billion yuan, respectively. We judge that this is mainly due to weak overseas demand and customer inventory loss. Since 23H2, overseas demand has been warm. According to data from the General Administration of Customs, China's office chair exports increased 7.2% year on year to US$3.20 billion in 2023, of which 23Q1/Q2/Q3/Q4 was -4.0%/+10.5%/+18.5%, respectively, and 24Q1 exports were +22.7% YoY to US$926 million. The growth rate further increased, confirming the gradual elimination of terminal inventory. The company's overseas production capacity and supply chain construction continued to advance, and we are looking forward to revenue performance in 24 years.
The gross sales margin also increased by 3.54 pct, and the sales expense ratio increased by 3.81 pct and the gross sales margin increased by 3.54 pct to 22.9% in 23. We determined that it was mainly due to business structure optimization, declining raw material and shipping costs, and the appreciation of the US dollar; the cost ratio also increased by 4.08 pcts to 15.7% during the 23-year period, of which the sales expense ratio also increased by 3.81 pcts to 7.4%, mainly due to increased independent brand building, marketing and promotion expenses; management+R&D expenses increased 1.05 pct to 9.4%, mainly due to the increase in management and R&D expenses of 1.05 pcts to 9.4%, mainly due to the increase in management and R&D expenses This is due to the decline in revenue growth and the weakening of the dilution effect on rigid expenses; the financial expenses ratio also decreased by 0.77 pct to -1.12%, mainly due to an increase in net interest income.
Looking at the product+channel+brand sub-model to accelerate the construction of independent domestic trade brands, the company's OBM business revenue also increased 66.59% to 710 million yuan in '23. During the “Double Eleven” period in '23, the online omni-channel GMV for self-branded armchair products also increased 256%, and the industry rankings rose to second, third, and second place respectively among similar products on the Tmall, JD, and Douyin platforms. At the same time, the company has accelerated the layout of offline independent channels, launched the “100 Cities Attack” market coverage deepening plan, and its own brands have entered many large well-known supermarkets. The number of engineering channel customers and major direct management customers has further increased, helping sales growth and brand communication, and is looking forward to future independent brand performance.
Risk warning: Demand recovery falls short of expectations, raw material prices fluctuate greatly, and there is a risk of exchange rate fluctuations.