2023 Revenue +1% YoY /Net Profit to Mother -24% YoY. 1) The company's revenue in 2023 was 1.46 billion yuan, +1% year on year, net profit to mother was 110 million yuan, -24% year over year, and net profit after deducting non-return to mother was 100 million yuan, -25% year over year. We determine that the decline in net profit to mother was mainly due to a decline in the scale of the OEM export business. In terms of profit quality: gross margin was basically flat at 28.3% year over year, sales expense ratio +1.8 pct to 8.6% year on year (mainly required for private brand business development), management expenses ratio +0.6 pct to 6.6% year on year; financial expenses ratio +0.3 pct to 0.4% year on year (main exchange income decreased year on year); net margin -2.5 pct to 7.3% year over year. 2) Looking at a single quarter, 2023Q4's revenue was 300 million yuan, +8% year-on-year, and net profit to mother was a slight loss.
2023Q4's gross margin was -2.6 pct to 28.4% year on year, sales/management/financial expense ratios were -1.9/+1.3 pct/ year on year, flat to 11.7%/9.6%/1.5% year on year, and net margin was -4.8 pct to -1.1% year over year. 3) In 2023, the company plans to pay a cash dividend of 1.2 yuan per share (tax included), with a total annual cash dividend of about 80 million yuan, accounting for 75% of the current net profit to mother. The dividend rate calculated at the 2024/4/29 closing price is 3.8%.
2024Q1 revenue also increased 4%; net profit to mother also increased 9%. 1) 2024Q1's revenue was 360 million yuan, +4% year on year, net profit to mother was 0.3 billion yuan, +9% year on year, net profit after deducting non-return to mother was 0.3 billion yuan, +17% year on year. 2) Profit quality:
The gross margin was +1.2pct to 27.7%, the sales/management/ finance expense ratio was -1.7/+2.1/-0.5pct to 5.5%/7.9%/0.9%, respectively, and the net margin was +0.4pct to 8.9% yoy.
Domestic private brands expand their revenue scale and strengthen product matrix advantages. Domestic camping tracks are booming. In 2023/2024Q1, the company's own brand business revenue was +31%/-9% year-on-year to 9.26/ 141 million yuan, respectively, and gross margin was -5.2/-0.7pct to 29.0%/30.4%, respectively. Considering the gradual warming of the weather and the peak season for camping, we estimate that subsequent terminal performance is expected to improve, and business revenue is expected to maintain healthy and rapid growth throughout 2024. 1) Product: Continue to innovate and iterate, launch an outdoor hiking product line, develop hiking tents suitable for Chinese people, enrich the matrix of car camping and other scenarios, and help brands break the circle through joint products and cross-border cooperation. 2) Channel: The Damu Equipment brand's online sales fluctuated in the short term, and offline performance was relatively good (we judge that it continues to develop major customers such as car companies). ① DaMaki: 2023/2024Q1 online sales were +3.5%/-21% to 3.30/0.44 billion yuan, respectively; offline sales were +63%/-2% year-on-year to 5.10/0.78 billion yuan; ② Komaki: 2023/2024Q1 direct sales were -11%/-12% year-on-year to 0.19/0.04 billion yuan, and franchise sales were +28%/+11% year-on-year to 0.67/015 million yuan. Considering the strong boom in the outdoor clothing industry, we judge that the company is expected to strengthen Komaki in 2024 Brand, product adjustments+channel expansion are expected to drive business performance.
The OEM business is under pressure from orders in 2023, and 2024Q1 is growing healthily. 1) We judge that industrial business orders were weak in the 2023s. The main reason is that downstream customers are still removing inventory, which has improved month-on-month since 2024Q1. In 2023/2024Q1, the company's foundry business revenue was -26%/+14% year-on-year to $529/215 million yuan. Based on the company's cost reduction and fee control situation, we judge that the overall profit quality of this business is at a high level. 2) In the medium to long term, the company's tent production capacity is at the highest level in China (1.74 million tent production in 2023). We cooperate with core global outdoor brands to continuously improve product innovation capabilities. Considering the 2024Q1 shipment and order situation, we comprehensively estimate that the company's OEM business revenue is expected to grow steadily in 2024.
The operating situation is manageable and is expected to improve in the future. 1) Inventory: At the end of 2024Q1, the company's inventory was -14.6% year-on-year to 570 million yuan, and the number of inventory turnover days in 2023/2024 Q1 was +8.1/-39.5 days to 222.8/203.3 days, respectively. As the business progresses normally, we expect the company's operating turnover to continue to improve. 2) The company's net operating cash flow in 2023 was 280 million yuan (about 2.6 times net profit due to mother during the same period), and the net operating cash flow of 2024Q1 was -80 million yuan. We judge that it is in line with seasonal characteristics, and the overall performance is normal.
The company's revenue and net profit to mother are still expected to grow steadily in 2024. Considering that current OEM business orders have improved month-on-month, we estimate that industrial business revenue is expected to grow steadily in the 20240s; with the arrival of the peak season, sales performance of our own brands is expected to improve.
Taken together, we estimate that the company's revenue and net profit to mother are expected to grow steadily in 2024.
Investment advice: Considering the company's actual performance in 2023 and recently, we predict that the company's net profit from 2024 to 2026 will be 1.15/1.27/146 million yuan, which corresponds to 19 times PE in 2024, maintaining the “increase” rating.
Risk warning: risk of industry sentiment fluctuations; risk of fluctuations in raw material prices; risk of fluctuations in orders from major customers; risk of exchange rate fluctuations.