Incident: On April 26, 2024, Xinbao Co., Ltd. released its 2023 annual report and 2024 quarterly report.
2023 revenue/net profit attributable to mother/ net profit without return to mother were $146.47/9.77/ 996 million yuan, respectively, +6.94/+1.64/ -0.51% year-on-year respectively, of which 2023Q4 was 38.92/2.41/195 million yuan respectively, +30.66/+105.07/ +180.72% year-on-year respectively; 2024Q1 was 34.74/1.73/213 million, respectively, +22.79/+24.74/ +131.83%, 2023Q4 and The growth rate of 2024Q1 is relatively good under the low base effect.
The growth rate of 2023H2 household appliances reached 60%. The expansion effect was obvious, and the domestic sales of the 2024Q1 improved.
By product, revenue from kitchen appliances/household appliances/other products in 2023 was 98.98/24.90/1.941 billion yuan, respectively, +4.08/+20.41/ +3.14% year on year, of which 2023H2 was +20.74/+9.10% year on year, respectively. 2023H2 growth accelerated, and household appliances grew by 60%, with obvious expansion results.
By region, export/domestic sales revenue in 2023 was 108.11/38.36 billion yuan, or +11.08%/-3.22% year on year, of which 2023Q4 was +51.59/ +0.55% year on year; 2024Q1 was +30/ +7% year on year, respectively. 2024Q1 export sales continued to be strong, and domestic sales improved.
By sales model, global OEM and independent brand revenue in 2023 was 119.42/2.705 billion yuan respectively, or +10.42/ -6.11% year-on-year respectively. Independent brands are under pressure due to domestic consumer demand.
Looking ahead, the export sales base of 2023Q2 is still low. It is expected to maintain rapid growth in 2024Q2. The growth rate of 2024H2 may fall back to steady growth, and domestic sales are looking forward to the performance of new products from independent brands.
All cost ratios of 2024Q1 have been optimized, and the gross margin of kitchen appliances increased by 2.5 pct in 2023.
Gross profit margin: 2023A/2023Q4/2024Q1 was 22.74/23.39/ 21.92%, respectively, +1.62/-0.47/+0.03pct, respectively. Among them, kitchen appliances/household appliances/other products in 2023 were 24.25/18.57/ 19.15%, and +2.53/-0.61/-0.25pct, respectively. The increase in gross margin in 2023 was mainly driven by an increase in the gross margin of kitchen appliances. The overall gross margin of 2024Q1 is stable.
Expense side: Sales/management/R&D/finance expenses in 2023 were 3.96/5.88/3.79/ -0.58%, respectively, +0.46/+0.15/+0.29/+1.26pct, respectively. Among them, 2023Q4 was 4.86/7.11/3.65/ 0.60%, and -0.49/-0.43/-1.03/-0.73pct, respectively. 2024Q1 was 3.97/5.49/3.80/ -0.93%, respectively, -0.29/-0.29/-2.00pct, respectively. 2023Q4 and 2024Q1 expenses were optimized. The sharp decline in 2024Q1 financial expenses was mainly affected by exchange earnings, which increased 78.86 million yuan from 2023Q1, but hedging losses were +80.41 million yuan year on year.
Net profit margin to mother: 2023A/2023Q4/2024Q1 was 6.67/6.20/ 4.97%, respectively, -0.35/+2.25/+0.08pct year-on-year, respectively.
Investment advice: The company is an export leader in the small home appliance industry, has a solid customer base and strong scale advantage, and continues to expand customers and categories; the domestic market is developed with independent brands such as Mofei, Dongling, Baishengtu, Mingzhan, and Gelan, and is optimistic about the company's steady development. We expect the company's net profit to be 1,103/12.39/1,387 billion yuan in 2024-2026, the corresponding EPS is 1.34/1.51/1.69 yuan, respectively, and the PE corresponding to the current stock price is 12.39/11.02/9.85 times, respectively. Maintain a “Recommended” rating.
Risk warning: International market demand has declined, domestic market development falls short of expectations, market competition has intensified, raw material prices have fluctuated greatly, labor costs have risen, exchange rates have fluctuated greatly, and the performance of fund-raising investment projects falls short of expectations, etc.