Performance summary: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 15.69 billion yuan, +11.5% year over year; realized net profit of 3.87 billion yuan, +21.4% year on year; realized deduction of non-net profit of 3.7 billion yuan, +27.5% year on year. Looking at a single quarter, 2023Q4 achieved revenue of 4.09 billion yuan, +13.3% year on year; realized net profit of 1.06 billion yuan, +27.8% year on year; realized net profit of 1.08 billion yuan after deduction, +36.4% year on year. 2024Q1 achieved revenue of 3.8 billion yuan, +14.1% year on year; realized net profit of 9.3 billion yuan, +26.3% year over year; realized net profit of 82 billion yuan after deduction, +26.7% year on year. In 2023, the company plans to distribute a cash dividend of 3.1 yuan (tax included) to all shareholders, with a total cash dividend of 2.76 billion yuan, with a cash dividend rate of 71.4%. At the same time, it will transfer 0.45 shares per share to all shareholders, and the total share capital of the company will be 1.29 billion shares after the transfer.
Operational efficiency is improved, and profitability is continuously optimized. The company's overall gross margin in 2023 was 43.2%, +5.2pp year over year. Among them, 2023Q4 gross margin was 46.8%, +5.8pp year over year. Thanks to the decline in raw material prices, the company's promotion of digital transformation, strengthening cost control, improving operational efficiency, and improving gross margins of various categories to varying degrees. By product, the gross margin of the company's electrical connection products in 2023 was 40.9% (+6.6pp); the gross margin of smart electrical lighting products was 45.8% (+3.9pp); and the gross margin of new energy products was 34.2% (+1.8pp). In terms of cost ratio, the company's sales expense rate/management expense rate/financial expense rate/R&D expense ratio in 2023 were 6.8%/4%/-0.7%/4.3%, respectively, +1.1 pp/+0.4 pp/+0.1 pp/+0.1 pp compared to the same period. The company's marketing efforts have been increased, the brand content has been further enriched, and the sales expense ratio has increased. Taken together, the company's net interest rate was 24.7%, +2pp year-on-year. 2024Q1 gross margin was 42.2%, +5pp; on the cost side, the total cost ratio was 15.5%, +1.9pp. Among them, the sales expense rate/management expense rate/R&D cost rate/ financial expense ratio were 7.4%/4.2%/4.5%/-0.7%, respectively, with a year-on-year change of +1pp/+0.2pp/+0.7pp/-0.1pp. The company's advertising campaign continues to increase, further strengthening the brand's reputation.
The net margin of 2024Q1 was 24.4%, +2.4pp year on year, and profitability continued to increase.
Traditional businesses are growing steadily, and emerging businesses are rapidly expanding. By product, 1) the electric connectivity business continues to innovate and upgrade products around consumer demand, strengthening the new image of fashion and high-end brands, and achieving steady growth, achieving annual revenue of 7.39 billion yuan, an increase of 4.8%; 2) Smart electrical lighting products achieved annual revenue of 7.90 billion yuan, an increase of 15.4% year on year. The company is committed to building an intelligent front-mounted electronics ecosystem with smart headlights as the core, and is determined to promote the transformation of the new retail model of offline flagship store+online drainage, overcoming the challenges of deep adjustment in the real estate industry; 3) The annual revenue of new energy products reached 3.8 billion yuan 100 million yuan, an increase of 148.6% over the previous year. The company's new energy business rapidly enriched its product line, established a comprehensive competitive advantage in technology, supply chain, channels, etc., and achieved leapfrog growth.
Multi-channel collaborative development to accelerate business internationalization. 1) In terms of hardware outlets, the company has improved the efficiency and output of individual stores through measures such as improving store display and building exclusive sales areas, effectively boosting sales of various products, and continuously enhancing the stickiness between terminal sales outlets and customer groups; 2) In terms of decoration channels, on the one hand, it has promoted the channel to sink into the county market and launched the construction layout of all categories of flagship stores, which has strongly driven the development of all categories of businesses. On the other hand, it has made efforts to expand installation channels to provide electricity solutions for the whole house; 3) In terms of new energy channels, in 2023, the company developed more than 17,000 C-terminal outlets, B-side operation More than 1500 commercial customers. In terms of overseas business, in 2023, the company established an international division and established overseas subsidiaries such as Germany and Indonesia to accelerate the localization of organizations and teams and rapidly integrate internal and external resources. The company conforms to the new cycle of home appliance development in Southeast Asia and other countries, and seizes development opportunities with products such as electric connections and electrical lighting as the core. Facing the new cycle of new energy development in the European and American markets, the company quickly entered the new energy charging and household energy storage business as the core. The company actively promotes overseas business development, and overseas business is expected to become a new growth engine for the company.
Profit forecasting and investment advice. EPS is expected to be 5.05 yuan, 5.81 yuan, and 6.64 yuan respectively in 2024-2026, corresponding PE is 23 times, 20 times, and 18 times, respectively. Considering the steady growth in the company's performance, there is plenty of room for growth in new categories, maintaining a “holding” rating.
Risk warning: risk of significant fluctuations in material prices; risk of increased market competition; risk of business development falling short of expectations.