Event: The company released its 2023 annual report and 2024 quarterly report. The company achieved operating income of 15.502 billion yuan in 2023, an increase of 1.16% over the previous year; net profit to mother was 612 million yuan, an increase of -63.96% over the previous year. Among them, in 2023Q4, the company achieved operating income of 4.971 billion yuan, a year-on-year increase of -4.42%; realized net profit to mother of 08 billion yuan, an increase of -98.54% over the previous year. In 2024Q1, the company achieved operating income of 3.474 billion yuan, a year-on-year increase of 7.35%; realized net profit to mother of 298 million yuan, an increase of -8.71% year-on-year; and received -4.95% of cash from sales.
The sweeper business declined in 2023, and Tianke performed well. By brand: In 2023, the revenue of the Covos/Tianke brand was -1.49%/+5.24% year over year to 76.81/7.271 billion yuan; sales volume of sweepers/Tianke was -8.9%/+25.4% year-on-year to 2,842,000 units, respectively. By region: In 2023, domestic/overseas business revenue was -11.43%/+25.76%, respectively, to 89.80/6.522 billion yuan, of which overseas revenue of Covos/Tianke was +20.1%/+40.5%, respectively. The 2023 internationalization strategy began to pay off. Covos's European revenue was +40.5% year-on-year, and the addition was able to enter more than 1,800 Target stores.
The sweeper industry is booming in 2024. Looking at the industry: According to Aowei Cloud Network, the entire sweeper industry's 2024Q1 online sales/sales growth rates were 38.27%/33.83%, respectively, and the 2024M3 sales/sales growth rate was 61.61%/53.52% year on year, and the boom is high. According to the company: According to Aowei Cloud Network, the year-on-year growth rates of Covos 2024Q1 online sales/sales volume were -6.15%/-7.55%, respectively, and 2024M3 online sales/sales volume were +12.07%/+11.15% respectively, achieving a correction.
The floor washer industry continued to grow in 2024. Industry view: According to Aowei Cloud Network, the year-on-year growth rate of online sales/sales of the entire floor washer industry in 2024Q1 was 35.38%/73.76%, respectively. According to the company: According to Aowei Cloud Network, the year-on-year growth rate of Tianke's online sales/sales volume in 2024Q1 was 22.17%/64.64%, respectively, with a sales market share of 44.45%, maintaining the top position in the industry.
The decline has narrowed since 2024. 1) Gross profit margin: 2023Q4/2024Q1, the company's gross margin was -8.8pct/-3.5pct year-on-year to 46.46%/47.17%, respectively. 2) Rate side: 2023Q4 sales/management/R&D/finance rates were +3.79pct/+0.25pct/+0.52pct/-0.49pct; 2024Q1 was -1.63pct/-1.28pct/+0.55pct/-0.45pct, respectively. 3) Net interest rate: Overall, the company's 2023Q4/2024Q1 net interest rate was -10.92pct/-1.5pct to 0.16%/8.58%, respectively.
Profit forecasting and investment advice. We expect net profit attributable to mother for 2024-2026 to be 1,430/17.42/2.01 billion yuan, respectively, +133.6%/+21.8%/+20.6% year-on-year, maintaining the “gain” rating.
Risk warning: risk of raw material price fluctuations, increased industry competition, risk of exchange rate fluctuations.