Key points of investment:
Revenue and performance were basically in line with expectations, and dividends exceeded expectations. In 2023, the company achieved revenue of 1,529 billion yuan, a year-on-year increase of 4%; realized net profit of 230 million yuan, a year-on-year decrease of 7%; and realized net profit without deduction of 205 million yuan, a year-on-year decrease of 3%.
Among them, Q4 achieved revenue of 390 million yuan in a single quarter, a year-on-year increase of 13%; realized net profit of 44 million yuan, a year-on-year decrease of 7%; and realized net profit without deduction of 0.26 million yuan, a year-on-year decrease of 25%. The 24Q1 company achieved revenue of 349 million yuan, the same as the previous year; achieved net profit of 51 million yuan, an increase of 14% over the previous year; and realized net profit without deduction of 37 million yuan, a year-on-year decrease of 14%. The company announced a profit distribution plan for 2023. It plans to distribute cash dividends of RMB 19.10 to all shareholders for every 10 shares, and a total cash dividend of RMB 200 million, accounting for 86.85% of the company's net profit to mother. At the same time, the company announced a shareholder return plan for the next three years (2023-2025), and the profit distributed in cash every year is not less than 50% of the distributable profit achieved in that year. The company's revenue and performance are basically in line with market expectations, and the dividend rate greatly exceeds the market's previous expectations.
The commercial lighting sector is growing steadily, and specialty lighting tracks open up room for growth. According to data from the China Lighting Association, due to factors such as the foreign trade environment and the acceleration of supply chain adjustments, China's lighting industry's total exports in 2023 were about 56.3 billion US dollars, down 7% year on year, and the overall trend is under pressure. Among them, the export value of LED lighting products was about 42.4 billion US dollars, down 5% year on year. Against the backdrop of a major decline in the industry, the company's revenue continued to grow. By category, commercial lighting sector companies achieved revenue of 868 million yuan, an increase of 3.80% year on year; industrial lighting sector companies achieved revenue of 578 million yuan, a slight decrease of 0.99% year on year.
The special lighting sector achieved revenue of 815 million yuan, an increase of 85.85% over the previous year. In recent years, the company has continued to explore sectors such as plant lighting, beauty lighting, explosion-proof lighting, and emergency lighting, opening up room for the company's long-term growth.
Gross profit margin increased steadily in '23. The company achieved a gross profit margin of 32.89% in '23, an increase of 0.83 pcts over the previous year. It is estimated that due mainly to changes in product structure, the share of revenue from industrial lighting and special lighting products with higher gross margins will increase. 24Q1 achieved gross profit margin of 30.91%, down 1.46 pcts year over year. In terms of period expenses, the company's 23-year sales expense ratio was 6.01%, up 0.66 pcts year on year, management expenses ratio and financial expense ratio were 4.89% and -1.16% respectively, up 0.67 and 0.21 pcts, respectively. The net profit margin for 23 years was 14.93%, down 1.76 pcts year over year. 24Q1 achieved a net profit margin of 14.48%, an increase of 1.79 pcts year-on-year.
Profit forecasts were lowered slightly to maintain the “increase in holdings” investment rating. We slightly lowered the company's profit forecast for 2024-2025. We expect to achieve net profit of 2.70 million yuan and 316 million yuan (previous values were 2.79 million yuan and 330 million yuan), respectively, and the net profit forecast for 2026 was 368 million yuan, up 17.3%, 16.9%, and 16.7% year-on-year respectively, corresponding to the current price-earnings ratio of 14, 12, and 10 times, respectively. In recent years, the company has continued to expand new scenarios such as street lights, stadiums, explosion-proof lights, emergency lighting, and plant lighting, opening up room for long-term growth and maintaining an investment rating of “gain”.
Risk warning: risk of exchange rate fluctuations; risk of fluctuations in raw material prices; increased risk of market competition.