Event: The company released its 2023 annual report and 2024 quarterly report. The company achieved operating income of 1,275 million yuan in 2023, an increase of 42.30% over the previous year; realized net profit to mother - 51 million yuan. Among them, the company achieved operating income of 333 million yuan in 2023Q4, an increase of 34.93% year on year, and realized net profit to mother - 35 million yuan, an increase of 48.02% year on year. The company achieved operating income of 293 million yuan in 2024Q1, an increase of 28.59% over the previous year; achieved net profit of 16 million yuan to mother.
Revenue from the shoulder business increased significantly. By product, the revenue of shoulder massagers was high. The company achieved revenue of 1.92/1.75/1.75/1.66/4.83/1.09/149 billion yuan in 2023, compared to -0.04%/-26.88%/+49.30%/+438.85%/30.95%/-17.00%. We judge that the high increase in shoulder revenue is related to sales of new products such as the Neck N5 Mini shoulder and neck massager, which accounts for a good share of the company's revenue in 2023. Up to 58.9%. At home and abroad, there has been a high increase in domestic revenue. In 2023, the company achieved domestic and foreign revenue of 1,200/73 billion yuan respectively, compared with +46.98%/-6.61%. We judge that the company's high domestic revenue increase was due to the company's active expansion of emerging channels and customers. The increase in the company's Douyin channel sales in 2023 brought about a 67.50% increase in the company's online direct sales revenue, while duty-free channels, franchise business and the addition of Sam's customers brought about a 68.74% increase in offline distribution revenue.
Profitability rebounded with cost reduction and efficiency. 1) Gross profit margin: 2023Q4/2024Q1 The company's gross margin was +12.07pct/+3.72pct year-on-year to 53.38%/62.78%. We judge that the increase in the company's gross margin was due to an increase in the share of shoulder revenue. 2) Rate side: The 2024Q1 sales/management/R&D/finance rate is 48.14%/4.88%/5.11%/0.05%, with year-on-year changes of -2.31pct/1.54pct/-0.23pct/-0.92pct, with strong cost management capabilities. 3) Net interest rate: Overall, the company's 2023q4/2024q1 net interest rate was +16.73pct/+6.12pct year-on-year to -10.37%/5.32%.
Profit forecasting and investment advice. Due to the slow recovery in industry demand, we expect the company's net profit to be 0.84/1.08/1.31 yuan in 2024 to 2026, respectively, an increase of 266.0%/28.2%/21.0%, maintaining the “buy” rating.
Risk warning: the risk of raw material price fluctuations, channel expansion falling short of expectations, and increased industry competition.