Revenue grew steadily, performance was outstanding, and dividends continued to be high. In 2023, the company achieved revenue of 15.69 billion/+11.5%, net profit of 3.87 billion/+21.4%, net profit of 3.70 billion/+27.5%; 2023Q4 revenue of 4.09 billion/+13.3%, net profit of 1.06 billion/+27.8%, net profit of non-return to mother 1.08 billion/36.5%; 2024Q1 revenue of 3.80 billion/+14.1%, net profit of 93 million/ +26.3%, net profit of non-return to mother of 82 million/ +26.7%. The company plans to distribute a cash dividend of 31 yuan for every 10 shares to all shareholders, for a total of 2.76 billion yuan, with a cash dividend rate of 71.4%. At the same time, it also plans to use a capital reserve fund to increase 4.5 shares for every 10 shares, increasing the total share capital to 1.29 billion shares.
The advantages of traditional main businesses have been consolidated, and new energy sources are growing rapidly. 1) Electric connection: annual revenue of 7.39 billion/+4.8%, gross profit margin of 40.9% /+6.6pct. The company continues to promote product renewal and consolidate its dominant position. The electric connection business has achieved steady growth, with more than 750,000 hardware channels and more than 250,000 digital channel sales outlets; 2) Smart electrical lighting: revenue of 7.90 billion/ +15.4% in 2023, gross profit margin of 45.8% /+3.9pct. Currently, there are more than 120,000 decoration channel sales outlets, and Muguang stores have basically covered provincial capitals, most prefecture-level cities and economically developed regions. We are committed to building a high-end product ecosystem with no headlights as the core, promoting channel transformation in flagship stores and new retail, and achieving continuous growth through the cycle; 3) New energy business: 2023 revenue of 380 million/ +148.6%, gross profit margin of 34.2% /+1.8pct, rapid enrichment of new energy product lines, gradually establishing competitive advantages in technology, supply chain and channels to achieve high growth.
Structural upgrades & cost reduction and efficiency have significantly improved profitability. 2023 gross profit margin 43.2% /+5.2pct, net margin 24.7% /+2.0pct; 2024Q1 gross profit margin 42.2% /+5.0pct, net profit margin 24.5% /+2.4pct. The increase in profitability is expected to be mainly due to falling raw material prices, product structure upgrades and procurement, and continuous cost reduction and efficiency on the manufacturing side. BBS, the Bull business management system, has become a powerful engine driving innovation growth and cost reduction and efficiency. Cost-side control is excellent. The 2024Q1 company's sales/management/R&D/finance expense ratio was 7.4%/4.2%/4.5%/-0.7%, +1.1 pct/0.2 pct/0.7 pct/-0.1 pct.
Announcing the 2024 Equity Incentive Plan and Special Talent Stock Ownership Plan. The equity incentive plan proposes to grant the number of restricted shares 2.43 million shares/0.27%. The special talent shareholding plan is expected to involve no more than 326,000 shares or 0.04% of the underlying shares. The unlocking targets are that the revenue or net profit for the assessment year is not lower than the average of the previous three fiscal years and not less than 110% of the average of the previous two fiscal years.
Risk warning: New business and channel development falls short of expectations; industry competition intensifies; raw materials fluctuate greatly.
Investment advice: Adjust profit forecasts to maintain a “buy” rating.
The company's core categories rank first in the industry, forming a strong brand effect and channel layout, and optimistic about the synergy between old and new businesses and new and old channels. After adjusting the profit forecast, net profit due to mother for 2024-2026 is estimated to be 44.7/51.5/5.95 billion (previous value: 43.9/50.0/- billion), +16%/15% YoY, diluted EPS = 5.02/5.78/6.67 yuan, corresponding to PE = 23/20/18x, maintaining the “buy” rating.