Profit side recovered significantly in 2023, 2024Q1 performance continued its growth trend and maintained a “buy” rating
In 2023, the company achieved revenue of 1,915 billion yuan (+20.48% year over year), achieving net profit attributable to mother/non-return of 0.83 billion yuan, an increase of 119.1%/188.3%; 2024Q1 achieved revenue of 437 million yuan (+9.95% year over year); and net profit attributable to mother/withheld from mother was 0.20/017 million yuan, an increase of 98.7%/105.4% year on year. With differentiated products and stable, high-quality customers, the company's profit side recovered significantly in 2023, and 2024Q1 performance continued to grow. We raised 2024-2025 and added 2026 net profit of 1.14/1.47/174 million yuan (pre-2024-2025 value: 1.07 billion yuan), corresponding EPS of 0.64/0.83/0.98 yuan, and the current stock price corresponding to PE is 17.0/13.2/11.1 times, maintaining a “buy” rating.
Revenue split: The coil & products business is growing steadily. I am optimistic about the steady recovery of coil & rapid product development. By product, the coil & products business is growing steadily. In 2023, coils/products achieved revenue of 718/1,180 million yuan, respectively; looking at the product branch, Bangyi's revenue in 2023 was 86 million yuan (-3.5% YoY); Guoguang (including Nachico, etc.) had revenue of 1.1 billion yuan (+23.1% year over year), of which the main business of wipes achieved revenue of 576 million yuan (+19.22% year over year). The private brand Xiaozhijia is growing rapidly, reaching 17 million yuan in 2023 (+67.5% year over year), and it is expected that it will continue to create explosive products to open up the market. Looking at the subregions, the main sales at home and abroad continue to grow, and the domestic share is gradually increasing. Domestic and overseas sales achieved revenue of 883/1,015 million yuan respectively in 2023, up 30.81%/12.87% respectively, accounting for 46.52% of domestic revenue (+3.64pct year on year).
Profitability has been rising steadily, operating capacity has maintained a healthy trend, and the dividend ratio has significantly increased profitability: gross and net interest rates in 2023 were 16.16%/4.32%, +2.3/+1.9pct, respectively, compared to +2.3/+1.9pct, respectively, and gross and net interest rates have been rising steadily. The cost rate for the 2023 period was 9.87% (+0.7pct year on year), and the sales/management/R&D/finance expenses ratio changed +0.3/-0.3/+0.3 pct year over year, respectively. The 2024Q1 gross and net margin was 15.04%/4.69%, -1.3/+2.1pct year over year, the cost ratio for the 2024Q1 period was 9.46% (-2.5pct year over year), and the sales/management/R&D/finance expense ratio changed +0.6/-0.4/-0.3/-2.4pct year on year, respectively. The company reduced costs and increased efficiency, and its profitability increased steadily. Operating capacity: As of the end of 2024Q1, the company's inventory size was 255 million yuan, +26.57% year-on-year, and the number of inventory turnover days was 52.6 days, a decrease of 0.5 days over the previous year. Net cash flow from operating activities in 2023/2024Q1 was $176/45 million, a year-on-year decrease of 22.38%/17.50%. Dividends: The company plans to distribute a cash dividend of 0.3 yuan/share, with a dividend ratio of 64.4%, a significant increase over previous years.
Risk warning: The industry falls short of expectations, and the expansion of private brands falls short of expectations.