Incident: The company announced its 2023 results. In 2023, the company achieved revenue of US$1,429 billion, a year-on-year decrease of 3.17% under comparable caliber, net profit from continuing operations of about US$70 million, and a year-on-year decrease of 36.96% under comparable caliber.
The revenue of the Joyang division is under pressure, and SN's Asia Pacific business is growing well. Looking at the segment, the revenue generated by the Joyang Division/SharkNinja Asia Pacific Division through sales to third parties in 2023 was US$1,053 /152 million, respectively. Among them, the Joyang division still has some pressure on revenue growth against the backdrop of weak demand in the domestic small household appliances market (the retail scale of Aowei caliber small kitchen appliances fell 10% year on year in 2023) and increased industry competition. The impressive revenue growth rate of the SN Asia Pacific division is mainly due to the good sales of the company's wireless vacuum cleaner products in the Japanese market and the company's rapid expansion into markets such as Australia and New Zealand through acquisitions, etc. By region, the company's revenue from sales to third parties in China/Japan in 2023 was US$1,038/0.92 billion, respectively, -20.6%/+43.7% year-on-year. At the same time, the company also gradually entered markets such as Oceania, Singapore, and Malaysia. Revenue from Australia and New Zealand/other markets in 2023 reached US$0.44/0.32 million, respectively.
Investment in marketing and human resources increased, and the company's profit level declined in 2023. In 2023, the gross margin of the company's continuing operations was 34.1%, down 2.3 pct year on year. After excluding related party business, the gross margin was 32.5%, up 0.1 pct year on year. Among them, the gross margin of the Jiuyang Division/SN Asia Pacific Division was -1.0pct/+2.6pct year on year respectively. The decline in gross margin of the Joyang Division was mainly due to the increase in the proportion of high-margin products and channels. In 2023, the company's sales and distribution expenses rate and administrative expenses ratio increased by 0.1 pct and 5.5 pct, respectively. The main reason was that the company increased its investment in brand promotion and human resources to expand the Asia-Pacific market, while matters such as business division led to a significant increase in one-time professional service costs. In 2023, the company's net interest rate for continuing operations was 4.9%, down 2.6 pct year on year.
Since the company completed the business split in 2023, the SN division revenue assumption was adjusted appropriately according to the business split situation, and the revenue growth assumption for Joyang was appropriately adjusted according to the domestic small appliance industry, and the company's net profit to the mother in 2023-2025 was estimated to be US$1.32/0.64 billion (previously predicted to be US$4.02/4.38/469 million US dollars, respectively), according to comparable companies, 11 times PE in 2024, corresponding to a target price of HK$1.54, maintaining a “buy” rating .
Risk warning
There is a risk that insufficient R&D and innovation capabilities will cause category expansion to fall short of expectations; risk of drastic changes in interregional trade policies; and risk of increased industry competition.