Incidents:
Boss Electric released 23 annual reports and 24 quarterly reports: net profit of 11.02 billion yuan, +9.06% year on year, net profit of 1.23 billion yuan, +10.20% year on year, net profit of 1.584 billion yuan, +7.06% year on year; 23Q4 achieved revenue of 3.269 billion yuan, +7.71% year on year, net profit of 360 million yuan, +6.18% year on year, net profit of 300 million yuan year on year, -13.40% year on year. In '23, the proposed dividend was 472 million, with a dividend rate of 27.2%; the January special dividend was 472 million, with a total dividend rate of 54%. 24Q1 revenue was 2.237 billion, +2.75% year over year, achieving net profit of 398 million yuan, +2.49% year over year, after deducting non-net profit of 353 million yuan, +3.34% year over year.
The trend of engineering channels is weakening, and retail and e-commerce are growing steadily
The company's revenue in '23 was +9%, of which engineering was +1%, accounting for 19%. Its growth was excellent in the first half of the year and weakened quarterly in the second half of the year; e-commerce and offline retail revenue was around +11%. In terms of category, revenue from large electric stoves was +10%/+9%, accounting for 71%; revenue from dishwashers and integrated stoves was +28%/+21%, accounting for 7%/4%, respectively; 23Q4 revenue was +8% year-on-year, mainly due to a sharp decline in engineering channels, and e-commerce and retail are expected to continue to grow steadily in double digits. The 24Q1 company's revenue was +3% year-on-year. The engineering channel is still being dragged down by a certain decline. The retail channel is expected to maintain steady growth, and the e-commerce channel is expected to remain basically flat year over year.
The impact of bad debts has basically been cleared, and comprehensive profit has remained stable
Affected by bad debt losses calculated at the end of the year, the net interest rate for the quarter of '21 and '22 was at a low level, with a 32.0% year-on-year credit impairment loss, which contributed 2.6 pct to the current net interest rate; however, due to factors such as business restructuring, the fourth quarter gross margin was -1.1 pct year over year, and the sales expense ratio was +3.4 pct year on year, putting pressure on operating profit margins; for the full year of '23, credit impairment losses were -54.4% year-on-year, contributing a positive 1.3 pct to net interest rate, but the gross sales margin was -0.7 pct yoy, attributable to net interest rate+ 0.2 pct to 15.5%. In 24Q1, the company's gross margin and sales expense ratio were -4.1/-4.2pct, respectively, and overall profitability remained stable.
Incentives guarantee business growth and increase the annual dividend ratio
The company disclosed ① the second phase of the business partner shareholding plan, which covers core executives and purchases the underlying shares in the secondary market after withdrawing funds; ② the 24-year option incentive plan covers 341 mid-level core cadres, with an exercise price of 18.92 yuan, and the source of shares is additional issuance or repurchase. Both ① and ② require that, based on 23-year revenue, the trigger condition is a compound increase of 5% in 24-26 revenue, and the target condition is a 10% increase; in addition, ① requires 24-26 deduction of non-net profit not lower than the 23-year level. In addition, the company disclosed future dividend plans: one cash dividend each in the first and second half of the year; the cash dividend ratio increased by no less than 50% in 24-26.
Incentives and plan dividends to give the company a “buy” rating. We expect the company's 24-25 revenue to be 123.38 billion and 13.625 billion, respectively, +10.43%, and net profit to mother of 18.99 billion and 2.104 billion, respectively, +9.61%, +10.79% year-on-year, EPS 2.00 and 2.22 yuan, respectively, and a CAGR of 10.28% for 23-26. Despite pressure on the industry, the company's leading advantage is outstanding. Combined with the development of a new growth curve, steady growth can be expected; in addition, the company has clarified future dividend plans to return shareholders; the company has been given 14X in 24 years, with a target price of 28.0 yuan, giving it a “buy” rating.
Risk warning: 1) Demand falls far short of expectations; 2) Prices of raw materials fluctuate greatly.