Overseas growth was positive in '23, with 1Q24 revenue and net profit returning to year-on-year growth. Maintaining the disclosure of the 23 annual report and the quarterly report for '24, the company achieved revenue of -4.64%, net profit to mother of -42.93%, and 1Q24 revenue/net profit to mother +7.69%/+0.52%, respectively. At the same time, the company plans to pay a dividend of 0.1 yuan per share. We introduced the 26-year forecast and adjusted the 24-25 EPS forecast to be 0.40/0.43/0.47 yuan (value 0.60, 0.73 yuan 24-25 years ago). As of 2024/4/26, Wind is comparable to the average PE of 18.4x. Considering that the company has well-known brands Philips, Delmar expects positive overseas expansion, revenue and net profit or positive recovery in 24 years, giving the company a 2024 PE 30x, corresponding to a target price of 12.0 yuan (previous value 13.52 yuan), maintaining the “increase” ” Ratings.
Business is gradually focusing, and water health continues to perform well in 23 years
In '23, the company's revenue from home environment, water health, and personal health was -10.22%, +10.31%, and -1.38%, respectively. The company optimized its product structure, focused on core products such as cleaning appliances, water health, personal care and health, and gradually withdrew from the lifestyle and bathroom category. The company's Philips brand water health products have performed well for 23 years, and the high-quality supply chain is expected to consolidate its leading position, and new licensing categories such as personal care, sports and health, etc.; although the Del Mar brand has been affected by the weakening of some categories in 23 years, it will further focus on smart cleaning tracks and continue to emphasize cost performance, which is expected to strengthen its influence in the Asia-Pacific and Eastern European markets.
Continue to look at overseas business growth
Based on the company's globalization strategy, it promotes sales of own/authorized brands overseas. With its accumulated supply chain advantages and product innovation and high cost performance, the company's overseas business revenue was +29.77% year on year. We believe that the Del Mar brand may continue to expand diversified overseas sales scenarios and continue to localize China's superior products overseas. The company already covers Asia Pacific, Southeast Asia, Europe, the Middle East, etc., and is expected to further deepen overseas channel layout in the future, and may be able to make gains in overseas core supermarket channels and e-commerce platforms.
The overall gross profit level increased year on year, but the cost ratio also increased significantly. The company's gross margin in 2023 was 30.76%, +1.27pct year over year, mainly driven by an increase in gross margin from overseas sales (+4.7pct year over year), 1Q24 gross margin +1.36 pct year over year. The company's overall cost ratio in 2023 was +4.57 pct year on year, mainly affected by increased marketing activities. The sales expense ratio was +3.79 pct year over year, and the management/R&D/financial expenses ratio was +0.38 pct/+1.09 pct/-0.7 pct year on year, respectively. The cost ratio was +2.23% year-on-year during the 1Q24 period (also mainly affected by the increase in the sales expense ratio).
It is expected that the brand will continue to strengthen its strength in 24 years
The 24-year business plan continues to focus on core category needs and continues to strengthen overseas channel development. At the same time, internal emphasis is placed on marketing transformation, product innovation iteration, production efficiency improvement, and digital transformation. We believe that the company has an advantage in a differentiated brand matrix. Relying on the manufacturing base and localized R&D capabilities to combine brand dividends in the future, it may be able to achieve higher growth.
Risk warning: Overseas demand is declining; domestic market development is blocked; industry competition is intensifying.