Incident: The company publishes its 23 annual report and 24 quarterly report. In '23, the company achieved revenue of 8.195 billion yuan, +25.78% year over year, net profit to mother of 263 million yuan, -26.60% year on year; Q1 had revenue of 2,354 billion yuan, +38.98% year over year, and net profit to mother of 103 million yuan, +31.20% year over year.
Revenue growth was high, and Yongyu contributed significantly across borders and mergers. The company's revenue was +25.78% year-on-year in '23, and achieved good performance. Specifically, the OEM/ODM business achieved revenue of 4.815 billion yuan, +29.09% year over year, mainly due to a high increase in new material flooring revenue (1,490 billion yuan, +557.21% year over year, due to Yongyu Home Furnishing's annual revenue); OBM business achieved revenue of 3.356 billion yuan, +21.27% year over year, of which LO revenue was 1,077 billion yuan, +27.91% year over year. Dr. Chef was affected by weak demand in the domestic new housing market, revenue of -26.71% to 658 million yuan, and online business achieved revenue of 16.21% 100 million yuan, +61.46% YoY.
Currently, the company has basically covered major online platforms such as Amazon, Walmart, TikTok, and TEMU.
Improve management efficiency, improve profitability, and impairment drags down profit release. Through large-scale direct procurement, combined with changes in market materials, the company effectively reduces material procurement costs, continuously maintains product price competitiveness, and enhances the overall gross profit margin of the product. The company's gross profit margin in 2023 was 23.78%, +2.01pct. As the company accrued 165 million asset impairment losses and 117 million credit impairment losses in '23, the company's net profit to mother was -26.60% YoY to $263 million. The higher asset impairment losses are mainly due to the company's current accruing of 87 million Dr. Chef's goodwill impairment losses; the higher credit impairment losses are expected to be due to an increase in accounts receivable related to Dr. Chef, bad debt losses and an increase in receivable financing impairment losses.
The 24Q1 performance was outstanding, and the full year results are worth looking forward to. With a high base for the same period last year (23Q1 revenue of 1,694 million yuan, +20.84% year over year), the company still achieved revenue of 2,354 billion yuan in 24Q1, or +38.98% compared to the same period last year. This is not easy. It is expected to be related to the continued strength of the online business.
Investment advice: Relying on cross-border e-commerce channels, the company gradually changed from a traditional OEM to a full-chain brand enterprise, and the company's texture continued to improve. We expect the company's net profit to be 508 million yuan, 778 million yuan, and 976 million yuan in 24-26 years, maintaining a “buy” rating.
Risk warning: New channel expansion falls short of expectations, global trade risks, and the domestic real estate industry continues to be sluggish.