Core views:

Revenue and profit growth was good in 2023. The company disclosed its 2023 annual report, with annual revenue of 7.79 billion yuan (YoY +7.2%), net profit to mother of 90,000 yuan (YoY +17.8%), gross profit margin of 40.3% (YoY+4.6pct), and net profit margin of 11.9% (YoY+1.1pct). In terms of cost ratio, sales/management/finance/R&D expenses rate was 18.5%/4.1%/-1.4%/5.4%, compared with +2.6pct/-0.3pct/-0.9pct/+0.3pct. 2023Q4 revenue of 2.28 billion yuan (YoY +10.5%), net profit due to mother of 270 million yuan (YoY -4.6%), net profit after deducting non-return mother of 280 million yuan (YoY +13.0%), gross profit margin of 43.2% (YoY+2.9pct), net profit margin of 11.6% (YoY-1.8pct). 2024Q1 revenue of 1.58 billion yuan (YoY +5.3%), net profit to mother of 120 million yuan (YoY +23.5%), net profit after deducting 100 million yuan (YoY +36.4%), gross profit margin 38.5% (YoY+1.6pct), net profit margin 7.6% (YoY+1.1pct). Revenue grew for the full year of '23 and 24Q1. Profitability increased significantly, and gross margin continued to increase year-on-year. The main reasons are: (1) continued promotion of platform-based transformation to drive an increase in gross margin; (2) product structure upgrade. In addition, the company announced that it plans to distribute 626 million yuan in cash, with a dividend rate of 67.7%. As of the closing price of 2024.04.26, the dividend rate is about 5%.

All channels have maintained a good development trend. 2023, sub-channel, (1) consumer business:

Promote diversified marketing methods, continue to focus on building top excellent dealer stores, and are expected to achieve good growth. (2) Commercial license: The company expands the coverage of high-end benchmark projects in the industry and continues to expand. (3) E-commerce: Optimizing the product structure while laying out online intelligent products, smart product sales are expected to grow further. (4) Overseas, revenue of 740 million yuan, a year-on-year increase of 6.3%.

Profit forecasting and investment advice. Industry demand is gradually recovering, and the platform-based strategy continues to be expanded. The scale advantage is remarkable, and channels are being actively optimized to gradually achieve results, and profits continue to increase. Net profit to mother is expected to increase by 10.2%, 9.2%, and 9.0% year-on-year in 2024-26. The company was given a 2024 PE 15x, corresponding to a reasonable value of 20.46 yuan/share, maintaining the “gain” rating.

Risk warning. Prices of raw materials have risen sharply; the real estate market has fluctuated greatly; competition has worsened.