Incident: In 2023, the company achieved revenue of 11.20 billion yuan, +9.1% year-on-year, net profit of 1.73 billion yuan, +10.2% year-on-year, net profit of 1.58 billion yuan after deducting net profit of 1.58 billion yuan, or +7.1% year-on-year. Among them, 23Q4 achieved revenue of 3.27 billion yuan, +7.7% year-on-year, net profit to mother of 360 million yuan, +6.2% year-on-year, and net profit after deducting non-attributable net profit of 300 million yuan, or -13.3% year-on-year. 24Q1 achieved revenue of 2.24 billion yuan, +2.8% year on year, net profit to mother of 40 million yuan, +2.5% year on year, net profit without return to mother 350 million yuan, +3.3% year on year. In terms of dividends, the company plans to distribute cash dividends of 5 yuan (tax included) to all shareholders in 2023 for every 10 shares, for a total of 472 million yuan, combined with the previously announced special dividend of 472 million yuan, with a cash dividend rate of about 54.5% for the whole year. The shareholder return plan for the next three years (2024-2026) will, in principle, pay cash dividends every year for the first and second half of the year. The cash dividend ratio for 24-26 has increased steadily compared to '23, and profits distributed in cash account for no less than 50% of net profit to mother for the year.
Lead the development of the industry and wait for real estate to stabilize. According to retail data from Aowei Cloud Network, retail sales of large kitchen and bathroom plates (smoke, stoves, electric heating, heating, cleaning, washing, built-in, integrated stoves) reached 166.9 billion yuan in 2023, +5.3% over the same period last year. Among them, the total scale of the categories just needed (smoke, stoves, electric heating, heating) was 99.8 billion yuan, +6.5% over the same period last year. Boss Electric outperformed the industry with a revenue growth rate of 9.1% throughout the year. The company's 24Q1 revenue growth rate has slowed. We expect it to continue to be pressured to complete real estate. Revenue split by category in '23, with range hood revenue accounting for 47.5%, revenue +10.1%; gas stoves accounting for 23.8%, revenue 8.7%; dishwasher revenue accounting for 6.8%, revenue +28.0%; integrated stoves generated 460 million yuan in revenue, accounting for 4.1% of revenue and +20.6% year-on-year revenue.
Gross margins are under slight pressure, and customer credit risk is gradually being released. The company's overall gross profit margin in 2023 was 50.7%, +0.7pct year on year; on the cost side, the company's sales/management/R&D/finance expenses ratio in 2023 was 26.8%/4.2%/3.5%/-1.7%, respectively, +1.4/-0.2pct year on year; due to the year-on-year decrease in impairment amounts in fiscal year 23, the company achieved a net profit margin of 15.5% to mother in 2023, +0.2pct year on year. The overall gross profit margin of 24Q1 was 50.6%, or 4.1pct year on year. We expect this is mainly due to the continuous increase in the share of new products with a relatively low gross margin of smoke stoves, but the gross sales gap of 24Q1 is basically stable year on year. The 24Q1 sales/management/R&D/finance expense rates were 26.7%/4.3%/3.1%/-2.3%, respectively, -4.2/+0.1/-0.04/-0.7pct. Under the combined influence, the company achieved a net profit margin of 17.8% in 24Q1, -0.05pct year on year.
The second phase of the Business Partner Shareholding Plan (draft) and the 2024 Stock Option Incentive Plan (draft) were launched, demonstrating confidence in long-term development. The second phase of the business partner shareholding plan includes the company's core management. The six directors and senior management account for no more than 30% of the shares, and are evenly distributed among the six. The total number of shares held by each shareholding plan shall not exceed 10% of the total share capital, and a single employee shall not exceed 1% of the total share capital. In revenue assessment, the CAGR for operating income from 23 to 24/25/26 was 10%/10% (target value), and the CAGR for operating income from 23 to 24/25/26 was 5%/5% (trigger value), respectively; after deducting non-net profit assessment, net profit after deducting non-net profit for 24-26 years was not lower than the level of 23. The 2024 stock option incentive plan targets middle management and core technology (business) executives (341 people). The number of stock options granted is 5.75 million, accounting for 0.61% of the total share capital, and the exercise price is 18.92 yuan/share. Revenue assessment, revenue CAGR for 23 to 24/25/26 was 10%/10% (target value), and revenue CAGR for 23 to 24/25/26 was 5%/5% (trigger value), respectively.
Investment suggestions: The company has a stable position as a leader in traditional smoke stoves, and has significant channel and brand advantages; high-growth dishwashers continue to penetrate, and famous brands, ROKI digital kitchen appliances, etc. gradually contribute to revenue growth. We are optimistic about the company's high-quality and outstanding management capabilities and a steady and clear growth path. We expect net profit of 19.5/21.9/2.44 billion yuan in 24-26 (2.5/2.51 billion yuan before 24/25, taking into account the decline in the company's Q1 gross margin, the full-year performance forecast was lowered), corresponding to PE 11x/10x/9x in 24-26, maintaining a “buy” rating.
Risk warning: demand for new products falls short of expectations; risk of rising raw material prices; risk of fluctuations in the real estate market; risk of increased market competition.