The company released its 2023 annual report: the company achieved revenue of 1,688 million yuan (+22.2%), net profit of 327 million yuan (+49.7%), net profit of not attributable to mother of 323 million yuan (+46.2%); 2023Q4 realized revenue of 572 million yuan (+53.1%), net profit to mother of 89 million yuan (+92.1%), net profit of non-return to mother of 94 million yuan (+110.1%). The share of high-margin smart home products has increased, and superimposed channel expansion efforts have increased, and the company's revenue has increased significantly and profitability has improved markedly.
E-commerce is growing steadily, and offline development is accelerating. In 2023, the company achieved online and offline revenue of 1,006 billion yuan/666 million yuan respectively, +13.71%/+37.51% year-on-year. 1) Online channels: Traditional e-commerce is growing steadily, and emerging e-commerce is expanding at an accelerated pace. Among traditional e-commerce platforms, leading platforms such as JD and Tmall grew steadily in 23 years; emerging e-commerce accelerated the Douyin layout and achieved high growth under a low base. 2) Offline channels: Continue to step up development efforts, and combine accurate investment promotion with agent support to drive volume. On the one hand, the company accurately invests in cities and divisions, builds a more complete terminal marketing system with stronger radiation capacity, accelerates channel sinking, deepens the layout of new channels such as hardware stores, new retail, and KA. On the other hand, it empowers terminal channels through professional training, marketing activities, and supporting support policies to continuously consolidate its leading offline advantage. The profitability of the two major channels increased in '23. The gross margin of online and offline channels was 53.92%/47.68%, respectively, +5.6 pct/5.1 pct compared to the previous year.
Smart homes are growing rapidly, and product structure is improving. In 2023, the company's smart home products/clothes drying rack products achieved revenue of 1,433 million yuan/216 million yuan respectively, +26.39%/+1.58% year-on-year. 1) Smart home: Volume growth has driven the rapid growth of smart products, with sales of smart products +17.77% in 23 years. Smart products continue to iterate and innovate, and the new products in the Asian Games series have been upgraded in terms of invisibility, function, and intelligence, bringing consumers a new experience of high-tech intelligent drying.
2) Ordinary drying racks: Ordinary clothes hangers have stabilized for 23 years and have resumed positive growth.
The proportion of high-margin products increased & the proportion of self-supply increased, and profitability improved significantly. In 2023, the company's gross margin was 51.4% (+5.0pct year on year). The main reason for the improvement in gross margin was: 1) the share of high-margin smart home products continued to increase, accounting for 84.86% of the revenue of smart home products in '23, +2.84pct year on year, gross margin of 53.1%, +4.84pct year; 2) The share of self-produced core components increased, increasing the proportion of self-supply and optimizing production processes, and successfully reducing costs and increasing efficiency. The company's net interest rate in 2023 was 19.4% (+3.6pct), and the 2023 sales/management/R&D/finance expense ratio was 20.3%/5.2%/3.2%/-0.5%, respectively, +1.7pct/-0.4pct/-0.0pct/+0.1pct.
Cash flow and operating efficiency are gradually improving. In 2023, the company generated a net operating cash flow of 500 million yuan (year-on-year +370 million yuan), accounts receivable turnover days 20.5 days (year-on-year -6.4 days), accounts payable turnover days of 72.0 days (year-on-year +5.8 days), and inventory turnover days of 78.3 days (year-on-year -18.3 days).
Profit forecast and investment rating: Simultaneous expansion of categories and channels is driving high growth, and profitability is expected to continue to improve. We expect the company's net profit to be 410 million yuan/490 million yuan/550 million yuan respectively in 2024-2026, corresponding to PE of 14.0X/11.9X/10.6X, maintaining the “buy” rating.
Risk warning: Channel development falls short of expectations, real estate recovery falls short of expectations, and industry competition intensifies.