Event: 2023: The company achieved revenue of 1.88 billion yuan, +11.98% year over year, net profit to mother of 290 million yuan, +9.45% year over year, net profit after deducting non-return to mother of 280 million yuan, +9.16% year over year. Among them, 23Q4 achieved revenue of 460 million yuan, -9.00% year-on-year, net profit of 40 million yuan, -60.19% year-on-year, and net profit after deducting non-attributable net profit of 0.3 billion yuan, or -61.63% year-on-year. The 24Q1 company achieved revenue of 280 million yuan, -23.51% year on year, net profit to mother of 40 million yuan, -32.23% year on year, and net profit after deducting non-return to mother of 40 million yuan, or -33.35% year on year. It is proposed to distribute a cash dividend of 10 yuan (tax included) to all shareholders for every 10 shares, adding a cash dividend of 33.34 million yuan (tax included) for 23 semi-annual profit distribution and a total payment capital of 6.68 million yuan (excluding fees such as stamp duty and transaction commissions) for 23 years (excluding stamp duty and transaction commissions), for a total of 206 million yuan (tax included), with a cash dividend ratio of 72.1%.

Comment:

Revenue declined from a high point, and the company stepped up its international market development efforts. The company's main business in 2023 was 1.84 billion yuan, +12.3% year-on-year. Among them, 1) Sales of major products in the civilian pump sector achieved revenue of 650 million yuan, the same level as in 2022. The domestic market recovered year on year, and overseas business declined slightly year on year due to strong US dollar interest rates. Among them, in terms of commercial pumps, Leike Pump had an annual revenue of 29.35 million yuan and a loss of 9.18 million yuan in 2023. 2) The main products in the household shielding pump segment achieved sales revenue of about 770 million yuan, an increase of more than 15% over the previous year. In terms of domestic sales, wall-mounted stoves have achieved rapid growth under a low base; in terms of export sales, benefiting from the penetration of energy-saving products and the development of new international markets, the household shielding pump business sales structure continues to be optimized, but currently the relevant downstream has entered the inventory digestion cycle, so there is pressure. 3) The main products of industrial pumps achieved sales revenue of about 300 million yuan, an increase of more than 41% over the previous year. Among them, the revenue of chemical shielding pumps was 200 million yuan, +42% year on year; air conditioning and refrigeration shielding pumps were 50 million yuan, +2% year over year. 4) Liquid-cooled pump products achieved sales revenue of about 50 million yuan. The company actively participated in the formulation of relevant industry standards, further developed in new fields such as energy storage and data room liquid cooling, and mainly served various downstream customer companies represented by Huawei, ZTE, Invec, Chery, Zero Run, and Shanghai Jet Hydrogen.

Gross profit continues to improve, and costs need to be optimized urgently. Benefiting from factors such as continuous adjustments in product structure and year-on-year decline in raw material prices, the company achieved a gross profit margin of 32.0%, a year-on-year increase of +2.6 pct, sales/management/R&D/financial expense ratios of 5.4%/4.6%/-1.0%, and +1.1/+0.2/+0.9/+0.6 pct. Under the combined influence, the company's net profit margin to mother was 15.2%, -0.4 pct year on year.

The 24Q1 gross profit margin was 35.9%, +2.9pct year on year, and the sales/management/R&D/finance expense ratios were 5.8%/7.1%/7.4%/-0.6%, respectively, and +1.5/+2.0/ -0.5pct year on year. To a certain extent, the cost ratio rose due to declining revenue. The company achieved a net profit margin of 14.8% to the mother during the quarter, -1.9 pct year on year.

Investment advice: Dayuan Pump Industry is a domestic shielded pump faucet. Civilian pumps, household pumps, industrial pumps, and liquid cooling pumps go hand in hand. It has a complete product matrix, leading technical manufacturing, and strong horizontal business expansion capabilities. The company's diversified business development logic is clear: the household shielding pump business contributes incrementally to the new market, structural optimization continues, industrial pumps successfully expand new customers+new scenarios, and commercial pumps contribute marginal growth. The net profit for 24-26 is estimated to be 3.4/3.9/450 million yuan (4.2/510 million yuan in 24-25 years ago), corresponding to 11x/9x/8x, maintaining a “buy” rating.

Risk warning: Market competition increases risk; risk of fluctuating raw material prices; management risk due to rapid expansion of scale.