Revenue continued to grow strongly, reversing losses sharply in Q1. The company achieved revenue of 1.27 billion yuan/ +42.3% in 2023, net profit due to mother - 50 million/year-on-year loss of 0.7 billion, net profit after deducting non-return to mother - 60 million/year-on-year loss of 80 million yuan. Among them, Q4 revenue was 330 million/ +34.9%, net profit attributable to mother - 0.3 billion yuan/year-on-year loss of 0.3 billion, net profit after deducting non-return net profit - 0.3 billion yuan/year-on-year loss of 0.3 billion yuan. 2024Q1 achieved revenue of 290 million/ +28.6%, net profit attributable to mother of 16 million/year-on-year reversal of losses, and net profit of 16 million/year over year after deducting non-return net profit.
Multiple measures have been taken to develop omnichannel, and online direct sales and offline distribution have ushered in strong growth. In 2023, the company's online direct sales revenue increased 67.5% to 590 million, offline distribution revenue increased 68.7% to 110 million, offline direct sales revenue increased 32.0% to 260 million, e-commerce platform inbound revenue increased 16.2% to 220 million, and online distribution revenue increased 19.0% to 60 million yuan. The company formed a “big single product” strategy to channel the Douyin channel into other e-commerce platforms and offline stores to drive the “big single product” strategy, creating a popular N5 mini, and driving rapid growth in online and offline revenue. At the same time, the company is actively expanding multiple channels to accelerate the development of franchisee channels, increasing the number of franchised stores by 14 to 44; developing channels such as Sam, duty-free and gifts, and promoting the growth of distribution revenue.
Optimize and expand overseas channels. The company's overseas revenue in 2023 fell 6.6% year on year to 73 million, mainly due to ODM revenue falling 26.3% to 25 million; its own brands are expected to achieve good growth. The company established a new overseas sales department, developed channels such as Amazon and TikTok, and entered offline operations, which is expected to bring in additional volume.
Revenue from shoulder massagers doubled, and new products contributed 60% of revenue. In 2023, the company's shoulder massager revenue increased 438.9% year-on-year to 480 million, becoming the company's largest category, driven by the N5 mini; eye massager revenue remained flat to 190 million, neck massager revenue fell 26.9% to 170 million, scalp+head massager revenue increased 49.3% to 170 million, lower back massager revenue increased 31.0% to 110 million, and revenue from other products fell 17.0% to 150 million. The company's promotion of new products has achieved remarkable results. New products such as the N5 Mini shoulder and neck massager and Scalp 3 scalp massage comb have grown strongly, accounting for 58.9% of new product revenue in 2023.
Open source and save money, and Q1 profit returned to the same period in 2021. The company's gross margin increased by 9.5 pct to 59.3% in 2023, and Q1 gross margin increased 3.7 pct to 62.8%. It is expected mainly due to an increase in the share of new products, supply chain cost reduction, and channel structure optimization. The company optimized direct-managed stores, controlled expenses, and optimized the number of direct-run stores from 20 to 143 in 2023. In 2023, the sales/management/R&D/finance expense ratios were +0.1/-0.7/-1.8/+0.3 pct, respectively. Against the backdrop of increased investment in e-commerce marketing expenses, the sales expenses rate only increased slightly; the optimization of management and R&D expenses was obvious, and the increase in financial expenses was mainly due to an increase in exchange losses.
Q1 The company's sales/management/R&D/finance expense ratios were -2.3/+1.5/-0.2/-0.9 pct year on year, and net profit margin increased 6.1 pct to 5.3% year over year, and profitability returned to a good level in the same period in 2021.
Risk warning: Competition in the industry intensifies; new product performance falls short of expectations; profit improvement falls short of expectations.
Investment advice: adjust profit forecasts and maintain a “buy” rating
The company is a leading massager in China. Taking into account consumer demand and the company's marketing investment, the company's net profit for 2024-2026 is estimated to be 1.0/1.4/180 million (previous value was 1.3/200/- 100 million), a year-on-year loss of +40%/+29%, corresponding to PE = 28/20/16x, maintaining a “buy” rating.