Key points of investment:
Q1 Revenue was in line with expectations, and performance was affected by forward foreign exchange contracts. The company achieved revenue of 14.647 billion yuan, +7% year over year; realized net profit of 977 million yuan, +2% year over year; realized net profit of 996 million yuan without return to mother, -1% year on year. Among them, Q4 achieved revenue of 3.892 billion yuan in a single quarter, an increase of 31% year on year; realized net profit of 241 million yuan, an increase of 105% year on year; realized net profit without deduction of 195 million yuan, an increase of 181% year on year. The Q1 quarter of 2024 achieved revenue of 3.474 billion yuan, a year-on-year increase of 23%; realized net profit of 173 million yuan, an increase of 25% over the previous year; realized net profit without deduction of 213 million yuan, an increase of 132% over the previous year. The 7% year-on-year increase in the company's revenue in 2023 was mainly due to the recovery in the export business. The increase in net profit due to the increase in scale combined with cost reduction and efficiency. The difference between return and deduction was mainly due to investment income and fair value changes brought about by forward foreign exchange contracts. In terms of dividends, the company plans to distribute a cash dividend of 4 yuan (tax included) for every 10 shares in 2023, with a total cash dividend of 327 million yuan, with a dividend rate of 33.5%.
The company's revenue performance for '23 exceeded our expectations. The 24Q1 revenue was in line with expectations, and the performance fell short of expectations.
Export sales increased rapidly, and coffee machines contributed to growth. By region, the company's export revenue in 2023 was 10.811 billion yuan, +11.08% year on year, and domestic sales revenue was 3.836 billion yuan, -3.22% year over year. The overall demand for small household appliances from overseas is gradually being restored, and the company's new products such as cloth cleaners and new bean grinders have performed well. The company's export orders improved markedly quarterly. 23H1 sales fell 14.4% year on year. The Q3-4 inflection point was reached, and the revenue side grew rapidly, reversing the downward trend during the year. The 24Q1 export order growth further accelerated, and the sales growth rate is expected to be 30%. Sales pressure is high in the small domestic kitchen industry. According to Aowei Cloud Network data, the 24Q1 kitchen appliance sales are still sluggish, with most categories showing a downward trend. Sales in the air fryers, electric pressure cookers, health pots, wall breakers, and juicer industries fell 32%/4%/5%/13%/11% year over year, and rice cookers and soy milk machines were +5%/31% year-on-year. The company achieved industry-leading growth. The Q1 order volume growth rate is expected to be around 7%. By product, in '23, the company's kitchen appliances/household appliances/other products achieved revenue of 98.98/24.90/1.941 billion yuan respectively, or +4.08%/20.41%/3.14% over the same period last year. By sales model, the company's ODM/independent brand achieved revenue of 119.42/2.705 billion yuan, +10.42%/-6.11% year-on-year. Sales of the Mofei and Dongling brands are under certain pressure. The Baishengtu brand is on a rapidly developing coffee machine circuit, and sales have grown rapidly.
Gross margin increased steadily, and performance was affected by expenses. In terms of profitability, the company's gross margin in 2023 was 22.74%, +1.62 pcts year over year, due to declining raw material costs and product structure upgrades. Performance was affected by the cost side. The increase in sales expenses was mainly due to brand promotion, etc., and financial expenses were mainly affected by exchange.
Profit forecasting and investment ratings. The company's export business improved markedly, domestic sales performance was steady, and categories such as coffee machines developed a second growth curve. We maintain our 24-25 profit forecast. We expect to achieve net profit of 10.68/1,169 billion yuan, respectively, and an additional 26-year profit forecast of 1,258 billion yuan, up 9%/9%/8% year-on-year respectively, corresponding to the current price-earnings ratio of 13/12/11 times, respectively. As a leading Western-style small household appliance company, the company's profitability is expected to gradually recover and maintain a “buy” investment rating against the backdrop of a significant recovery in export sales and the gradual expansion of new business.
Risk warning: risk of fluctuations in raw material prices; risk of exchange rate fluctuations.