The company released its 2023 annual report and 2024 quarterly report: in 2023, the company achieved operating income of 1,996 million yuan, an increase of 6.17%; realized net profit of 309 million yuan, an increase of 28.82% over the previous year; and realized net profit of 302 million yuan after deduction, an increase of 64.91% over the previous year. 2023Q4 achieved revenue of 625 million yuan, up 3.18% year on year; realized net profit of 92 million yuan, up 20.00% year on year; realized net profit after deduction of 109 million yuan, up 139.43% year on year. 2024Q1 achieved revenue of 381 million yuan, an increase of 10.06% year on year; realized net profit of 52 million yuan, an increase of 9.82% year on year; realized net profit after deduction of 46 million yuan, an increase of 0.10% year on year. The company plans to distribute a cash dividend of 8.0 yuan (tax included) for every 10 shares, totaling 309 million yuan (tax included), accounting for 99.99% of net profit due to mother in 2023.

Products continue to be iteratively updated, and electrical revenue continues to grow: 1) Materials: The company's materials business achieved revenue of 433 million yuan in 2023, a year-on-year decrease of 1.2%; 2) Electric appliances: achieved revenue of 1,513 billion yuan in 2023, an increase of 10.95% over the previous year. In the home appliance sector, the company continues to launch intelligent, healthy, and youthful high-quality household appliances through innovation and upgrading of products such as bathtubs, clothes dryers, and lighting. In 2023, the company launched kitchen air conditioning products with innovative hot and cold separation and quick cooling technology to provide a high-quality solution to the summer heat problem of traditional kitchens; the Aoxin FX-Pro series uses double cycle heating technology to achieve full coverage of warm air for a larger bathroom space. The company uses iterative product innovation to meet the diverse needs of consumers and promote steady revenue growth.

Online and offline omnichannel expansion to achieve steady revenue growth: 1) Offline channels: In 2023, the company achieved revenue of 1,298 billion yuan, an increase of 7.13% over the previous year. The company focuses on improving the speed and quality of offline store openings and optimizing the overall quality of the dealer team. By the end of 2023, the company had 1,051 agents and 1,469 specialty stores; 2) Online channels: In 2023, the company achieved revenue of 648 million yuan, an increase of 9.75% over the previous year. The company gives full play to the matrix advantages of traditional e-commerce platforms and emerging e-commerce platforms, and realizes off-site cultivation and in-site lock-up through a combination of punches, focusing on both traffic and the growth of brand potential, which ultimately translates into product sales and promotes revenue growth.

Profit forecast and rating: We expect net profit of 3.35, 3.59, and 387 million yuan in 24-26, with a year-on-year increase of 8.2%, 7.3%, and 7.8%. The current closing price corresponds to PE 14 or 13 times in 24-25. As a leading enterprise with a dual layout of home appliances & home furnishings, the company was given a PE valuation of 19 to 20 times in 2024, corresponding to a reasonable value range of 15.84 to 16.67 yuan, giving it a “superior to the market” rating.

Risk warning: The risk of raw material price fluctuations, channel promotion falls short of expectations, and new product development falls short of expectations.