In 2023, the company achieved revenue of 8.195 million/ +25.78%, net profit of 263 million/ -26.60%, net profit not attributable to mother of 235 million/ -27.32%. 24Q1 achieved revenue of 2,354 million/ +38.98% in a single quarter, net profit attributable to mother of 103 million/ +31.20%, and net profit after deducting non-return to mother of 103 million/ +33.96%. The company is a leading light industry overseas enterprise, promoting development through endogenous and outward extension, and maintains a “Highly Recommended” rating.
The combination of high cross-border growth+Yongyu contributed to high revenue growth. In 2023, the company achieved revenue of 8.195 million/ +25.78%, net profit of 263 million/ -26.60%, net profit not attributable to mother of 235 million/ -27.32%.
The company's revenue was hampered by the high growth of cross-border e-commerce and the rapid growth achieved by Yongyu's merger. Profits were hampered by the increase in the impairment of Dr. Chef's goodwill and impairment losses on accounts receivable. Looking at the 23Q4 single quarter, the company achieved revenue of 2,419 billion yuan/ +28.34%, and net profit to mother - 103 million yuan. In the 24Q1 quarter, the company achieved revenue of 2.354 million/ +38.98%, net profit attributable to mother of 103 million/ +31.20%, and net profit of 103 million/ +33.96% after deducting non-attributable net profit.
Diversified business development, and cross-border e-commerce has performed brilliantly. By category, the company's office furniture business revenue reached 3.470 billion/ +3.60% in 2023, and gross margin increased 2.06pct to 23.43%. The soft furniture business revenue was 1,287 million/ +2.99%, and gross margin increased 6.47pct to 27.25%. The new materials business achieved revenue of 1,490 million/ +557.21%, and gross margin decreased by 7.32pct to 19.85%. The panel furniture business had revenue of 1,121 million/ -17.66%, and gross margin fell to 18.82%. By business type, OEM and ODM business revenue is 4.815 billion/+29.09%, and OBM business revenue is 3.356 billion/+21.27%.
Gross margin improved, and various expense ratios were relatively stable. In 2023, the company's gross margin was 23.78% /+2.01pct, achieving a net profit margin of 3.39% /-1.84pct. The company's expense rate for the 2023 period was 16.37% /+0.67pct.
The financial expense ratio is 0.30% /+0.44pct, the management expense ratio is 5.13% /+0.16pct, the sales expense ratio is 8.24% /+0.40pct, and the R&D expense ratio is 2.70% /-0.33pct.
Investment advice. The company is a leading overseas enterprise in the light industry category. It also has remarkable product cost performance and quality advantages, and diversifies operating risks through acquisitions, and has deep barriers to foundry business. At the same time, the company is seizing cross-border e-commerce channels and actively laying out platforms such as Amazon and Tik Tok to achieve breakthroughs with cost performance, providing another growth momentum for the company's performance. Net profit for 2024E/25E/26E is estimated to be $56/67/8.4 billion yuan, respectively, maintaining the “Highly Recommended” rating.
Risk warning: risk of exchange rate fluctuations, increased risk of cross-border e-commerce industry competition, risk of impairment of goodwill