Incident: In 2023, the company achieved revenue of 7.79 billion yuan, +7.22% year on year, net profit to mother of 920 million yuan, +17.85% year over year, net profit of 850 million yuan after deducting net profit from back to mother, +34.17% year on year. Among them, 23Q4 achieved revenue of 2.28 billion yuan, +10.50% year-on-year, net profit to mother of 270 million yuan, -4.57% year-on-year, and net profit after deducting non-attributable net profit of 280 million yuan, +12.98% year-on-year. The 24Q1 company achieved revenue of 1.58 billion yuan, +5.35% year on year, net profit to mother of 120 million yuan, +23.48% year on year, net profit without return to mother of 100 million yuan, +36.42% year on year. In '23, it is planned to distribute cash dividends of 8.5 yuan (tax included) to all shareholders for every 10 shares. In total, it is proposed to distribute a cash dividend of 67.7%.

Get out of the adjustment cycle and achieve resilient growth. In 2023, the domestic general lighting market was about 246.6 billion yuan, down 0.1% from 2022. Under the downward pressure of market demand, the company relied on large-scale management and brand reputation building to show strong operational resilience. In 23, it achieved revenue of 7.79 billion yuan, +7.22% over the same period last year, and the leading share increased steadily. In domestic business, the company achieved revenue of 6.96 billion yuan, +7% over the same period. Among them, the home lighting channel further expanded and sank the market, focusing not only on the expansion of the number of outlets, but also on the improvement of the operating quality of outlets; commercial lighting continued to export high-standard integrated lighting solutions, setting benchmark projects in various commercial license segments; and laying out multiple platforms and categories in the e-commerce field to promote the transformation of online categories to the middle and high-end. In overseas business, the company achieved revenue of 740 million yuan in 23 years, +6% over the same period. Overseas, it adheres to its own brand development strategy and strengthens key countries such as Europe, Southeast Asia, and the Middle East.

Practice internal skills and follow the path of high-quality development. The company actively explores growth paths and increases profit levels through cost optimization and digital transformation. Continued progress in superimposing light quality and intelligent control technology has enabled the promotion of the company's high-value-added products. Thanks to the combined effects of the company's internal platform development, digital transformation, and intelligent upgrading, the company achieved a gross profit margin of 40.3% in 2023, +4.6pct year-on-year, and 38.5% in 24Q1, and +1.6pct year-on-year. On the cost side, the company's sales/management/R&D/finance expenses rates in 2023 were 18.5%/4.1%/5.4%/-1.4%, respectively, +2.6/-0.3/-0.9pct, 24Q1 sales/management/ R&D/finance expenses were 19.1%/4.9%/5.3%/-0.5%, respectively, +1.4/+1.7/-0.3pct. Under the combined influence, the company's profit level increased and continued to be realized, reaching a net interest rate of 11.9% to mother in '23, +1.1 pct year on year, and 7.6% net interest rate to mother in 24Q1, and +1.1 pct year on year.

Investment advice: As a leading domestic home lighting company, OPP has long been deeply involved in the construction of diversified domestic channels, consolidated product competitiveness, and continued to lead the market in scale. The company seizes the opportunity of industry intelligence to quickly enter, upgrade products and solutions, optimize store image and experience, and cultivate channel efficiency and long-term development strength. At the same time, the company is actively expanding product application areas and sales markets, accumulating rich experience in industry lighting solutions and project services in the commercial licensing field, and focusing on key overseas markets for channel layout, which is expected to create multiple growth curves. The company's net profit for 24-26 is estimated to be 10.5/11.8/1.33 billion yuan, corresponding to PE 13x/11x/10x, maintaining a “buy” rating.

Risk warning: Profit improvements driven by platformization fall short of expectations; risk of fluctuations in raw material prices; risk of exchange rate fluctuations; technology research and development falling short of expectations; increased industry competition; risk of fluctuations in the real estate industry.