The results for 2023 and 1Q24 are in line with our expectations

In 2023, the company achieved revenue of 2,457 billion yuan, -16.42% year-on-year; net profit attributable to mother - 378 million yuan, net profit not attributable to mother - 401 million yuan. Corresponding to 4Q23, the company achieved revenue of 653 million yuan, -9.4% year-on-year; net profit attributable to mother - 234 million yuan, net profit not attributable to mother - 242 million yuan. The 1Q24 company achieved revenue of 684 million yuan, +16.17% year over year; net profit to mother was 20.51 million yuan, which turned profit year on year; net profit after deducting non-return to mother - 2.85 million yuan, and the loss was reduced by 93.96% year on year. The company's performance was in line with our expectations.

Overall revenue continued to decline in 2023, with a year-on-year increase in 1Q24:1) The company's domestic/export revenue in 2023 was -3.0%/-30.0% year-on-year, respectively, to 1,429 million yuan/958 million yuan. The decline in domestic sales narrowed, and the sharp decline in export sales dragged down performance. 2) In 2023, the company's revenue for cookware/small household appliances was -16.1%/-0.6% year-on-year to 1,787 million yuan/368 million yuan, respectively. The cookware sector was repaired after removing the export portion; the small household appliances sector is still facing industry demand and competitive pressure. 3) With the end of overseas inventory removal, the company's 2H23 export revenue has resumed positive year-on-year growth, and 1Q24's overall revenue has turned year-on-year.

Financial analysis: 1) In 2023, the company's accrued asset and credit impairment losses totaled $136 million, mainly due to falling inventory prices, impairment of goodwill, and bad debts. The company's exchange revenue in 2023 was 8.55 million yuan, -81% year-on-year. 2) The company's gross margin in 2023 was -0.8ppt to 26.8% year-on-year. In addition, the company accelerated the Douyin channel layout and expanded the live streaming account matrix. The sales expense ratio in 2023 was +3.7ppt to 20.8% year-on-year.

3) Overall, the company showed significant losses in 2023. 4) The gross margin of the 1Q24 company increased and the cost ratio decreased, but the government subsidy of 26.36 million yuan greatly supported the performance, and subsequent results are yet to be seen.

Development trends

The subsidiary Qianjiang Robotics has attracted market attention: Qianjiang Robotics, a subsidiary of which Aishida holds 90% of its shares, focuses on the field of industrial robots. The main products include robots with various configurations such as four-axis handling and six-axis multi-joint. The product load covers 3kg-800kg, and has developed application functions such as welding, cutting, painting, polishing, sorting, and assembly. In 2023, Qianjiang Robot's revenue was 179 million yuan, -4.6% year on year; net loss was 66.37 million yuan, and the loss deepened by 17.4% year on year.

Profit forecasting and valuation

We kept our profit forecast for 2024 basically unchanged and introduced a profit forecast of RMB 21.29 million for 2025.

Maintain a neutral rating. The current stock price corresponds to the 2024/2025 net market ratio of 1.49 times/1.47 times. Due to the upward trend in the valuation center of the industry, we raised our target price by 16% to 8.00 yuan, corresponding to the 2024/2025 net market ratio of 1.61 times/1.59 times, with an upward margin of 4%.

risks

Risk of fluctuating market demand; risk of market competition; risk of emerging business development falling short of expectations.