Incident: The company discloses its 2023 annual report and 2024 quarterly report. 1) In 2023, the company achieved operating income of 2,653 billion yuan, net profit to mother of 511 million yuan, +13.80% year-on-year, and net profit after deducting non-return to mother of 496 million yuan, +22.17% year-on-year. 2) In the 2023Q4 quarter, the company achieved operating income of 596 million yuan, +9.49% year on year, net profit to mother of 104 million yuan, +31.18% year on year, net profit of 100 million yuan after deducting non-return net profit of 100 million yuan, +40.28% year on year. 3) In the 2024Q1 quarter, the company achieved operating income of 631 million yuan, +5.6% year-on-year, and net profit to mother of 165 million yuan, +68.81% year-on-year.
Shipping costs have declined year over year, and profitability has increased.
1) Profitability: In 2023, the company's gross margin and net margin were 43.50%/19.26%, with a year-on-year change of +5.72/2.4pct; among them, the gross margin/net margin for the 23Q4 single quarter was 48.67%/17.48%, respectively, +7.18pct/+3.08pct year-on-year. The gross margin/net margin for the 24Q1 single quarter was 48.15%/26.06%, respectively, +8.06pct/+9.76pct year on year, and -0.52pct/+8.58pct month-on-month.
2) Sea freight rate situation: According to Wind data, in the China Export Container Freight Index (CCFI) for the fourth week of December '23, the composite index was 909.19, -28.48% YoY, +3.35% month-on-month; European routes were 1107.46, -7.30% YoY, +5.51% month-on-month; US-East Asia routes were 867.28, -7.04% YoY, +1.46% month-on-month; West-America routes were 741.98, -11.43% YoY, +5.40% month-on-month; Southeast Asia routes were 684.32- YoY 3.61%, +0.50% month-on-month. We believe that the year-on-year decline in shipping costs is one of the reasons for the increase in the company's gross margin.
The overall control of the fee rate is good. 1) The company's expense rate for the 2023 period was 20.69%, +2.59pct year-on-year.
Among them, the sales/management/finance/R&D expense rates were 14.56%/5.67%/-2.01%/2.47%, respectively, +3.18/+0.12/-0.68/-0.04pct. The cost rate for the Q4 single quarter period was 26.25%, +4.1pct year-on-year. Among them, the sales/management/ financial/ R&D expenses ratio was 17.91%/6.72%/-1.76%/3.39%, respectively, +3.08/+0.39/0.13pct. 2) The cost rate for the 2024Q1 period was 17.65%, year-on-year change -4.38pct, month-on-month change 8.60pct. Among them, the sales/management/ financial/ R&D expense ratios were 13.18%/5.86%/-3.38%/2%, respectively, with year-on-year change of -1.11/+0.27/-3.65/+0.11pct.
The steady increase in sales volume of major products highlights the company's competitiveness, and revenue declined slightly due to lower product prices in response to shipping charges. According to the company's 2023 annual report, in the foreign sales market, the company lowered the sales prices of overseas subsidiaries in response to the “reduction in shipping freight rates”, which led to a corresponding decrease in the amount of export sales revenue.
Specifically, 1) Split by sector: ① Commercial catering refrigeration equipment: achieved revenue of 1,963 million yuan, yoy -1.11%, sales volume of 310,700 units, yoy +12.60%, gross profit margin of 44.92%, yoy+7.05pct; ② Western kitchen equipment: achieved revenue of 451 million yuan, yoy +4.64%, sales of 121,500 units, yoy +4.36%, gross profit margin of 41.43%, yoy+2.32pct; ③ Buffet equipment: achieved revenue of 159 million yuan; ④ Maintenance accessories: achieved revenue of 159 million yuan; Maintenance accessories: achieved revenue of 159 million yuan; Maintenance accessories: achieved revenue of 159 million yuan; Maintenance accessories: achieved revenue of 159 million yuan; Maintenance accessories: achieved revenue of 159 million yuan; Maintenance accessories: achieved revenue of 159 million yuan; Maintenance accessories: achieved revenue of 159 million yuan RMB 34 million; ⑤ Kitchen equipment project: achieved revenue of RMB 15 million.
2) Split by region: ① Domestic market: achieved revenue of 229 million yuan, yoy +91.07%, gross profit margin of 30.26%, yoy-2.16pct; ② Overseas market: realized revenue of 2,392 billion yuan, yoy -4.80%, gross profit margin 45.28%, yoy+6.88pct; 3) Split by sales model: ① OBM: realized revenue of 2.05 billion yuan, yoy -0.80%, gross profit margin of 47.34%, yoy+7.72pct; ② ODM: realized revenue of 6.02 billion yuan, yoy+ 0.39%, gross profit margin 33.17%, yoy-0.09pct.
Actively promote the global layout of our own brands and develop strategic efforts around products. 1) In terms of global layout:
The company actively promotes the global layout of its own brands, continues to promote the construction of overseas warehouses in the UK and France, and thoroughly investigated some countries and regions of the “85 Countries Plan”. By the end of 2023, the company had completed the construction of 31 overseas warehouses. 2) In terms of production capacity: The company has begun the construction process of the Thai production site plot 2, and the construction of the first phase of the Thai production base plot 2 project has been successfully completed. 3) In terms of new products: The company pioneered the launch of intelligent new products such as the “Universal Steaming Oven” and “Smart French Fries Robot” in the US market, and is expected to enter the chain catering channel through new intelligent products. The company's new product “Smart French Fries Robot” is becoming more mature. At the beginning of 2024, the “Automatic French Fries Packing Machine” product won the 2024 Kitchen Technology Innovation Award from the American Catering Association.
Profit forecast: We expect the company to achieve operating income of 31.52/36.74/4.289 billion yuan in 2024/2025/2026, an increase of 18.8%/16.6%/16.7% year-on-year; net profit to mother is 6.04/7.32/887 million yuan.
The year-on-year increase was 18.2%/21.2%/19.7%. Referring to the valuation of comparable companies, we gave the company a PE valuation of 22-24 times in 2024, slightly higher than the comparable company, with a reasonable value range of 31.59-34.47 yuan/share (the company's EPS is expected to be 1.44 yuan in 2024), corresponding to a reasonable market value of 133-145 billion yuan, “superior to the market” rating. Refer to the PB valuation, the company's 2024 PB is 3.90-4.25 times (the PB range of comparable companies in 2024 is 1.29-3.43 times), and the difference between the PB valuation of comparable companies is small , reasonable.
Risk warning: risk of fluctuations in shipping costs; risk of rising raw materials; risk of exchange rate fluctuations; volume of new products falling short of expectations;