Core views:

The Martians released their 2023 Annual Report and 2024 Quarterly Report. In 2023, the company's revenue was 2.14 billion yuan (YoY -6.0%), net profit attributable to mother of 250 million yuan (YoY -21.4%), gross profit margin 47.6% (YoY+2.6pct), and net profit margin 11.5% (YoY-2.2pct). The company's overall revenue is under pressure, mainly due to factors such as a decline in real estate and a slowdown in the overall growth rate of the integrated stove industry. According to data from Aowei Cloud Network, retail sales in the integrated stove market in 2023 were -4%/-4.2% year-on-year, respectively. Profit margins were also dragged down by bad trust accounts, and losses from changes in fair value exceeded 39 million yuan.

2024Q1's revenue is under pressure, and profitability has declined. The company's revenue for the first quarter was 350 million yuan (YoY -15.4%) and net profit attributable to mother was 40 million yuan (YoY -24.5%), mainly due to the decline in real estate. The gross profit margin was 45.6% (YoY -1.2pct), the net profit margin was 11.2% (YoY-0.6pct), and the sales/management/finance/R&D expense ratios were -0.1 pct/+0.3 pct/-1.0pct, respectively.

Policy incentives are expected to boost industry demand, and the company introduced a trade-in subsidy of 1,000 yuan. At the industry level, the trade-in policy is expected to accelerate the recovery of industry demand. The company responds positively to the national call to launch a 100 million yuan trade-in subsidy campaign. The entire system can enjoy a subsidy of 1,000 yuan, while comprehensively promoting the old kitchen renovation plan.

The company paid a dividend of 0.6 yuan per share in 2023, and the dividend ratio increased to 99.3%. The company announced its 2023 profit distribution plan. It plans to distribute cash dividends of RMB 6 (tax included) to all shareholders for every 10 shares, for a total cash of 250 million yuan, with a dividend ratio of 99.3%. Based on the closing price on the announcement date of April 26, 2024, the dividend rate reached 3.9%.

Profit forecast and investment advice: The net profit for 24-26 is expected to be 3.0, 3.4 billion yuan, and 370 million yuan, respectively, with year-on-year growth rates of 20.9%, 12.2%, and 10.4%, respectively. The latest closing price corresponding to 2024 PE is 21.12x. Referring to comparable company valuations and company dividend levels, the company was given 22 times PE in 2024, corresponding to a reasonable value of 16.08 yuan per share, giving it a “holding” rating.

Risk warning: Real estate market fluctuates, raw material prices fluctuate, and market competition intensifies.