Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 14.65 billion yuan, up 6.9% year on year; realized net profit of 980 million yuan, up 1.6% year on year; deducted non-net profit of 1 billion yuan, a decrease of 0.5% year on year. Looking at a single quarter, Q4 achieved revenue of 3.89 billion yuan, an increase of 30.7% year on year; realized net profit of 240 million yuan, an increase of 105.1% year on year; realized net profit after deduction of 190 million yuan, an increase of 180.7% year on year. In 2023, the company's cash dividend was 410 million yuan, and the performance dividend rate reached 41.7%. In 2024, Q1 achieved revenue of 3.47 billion yuan, an increase of 22.8% year on year; realized net profit of 170 million yuan, an increase of 24.7% year on year; realized deducted non-net profit of 210 million yuan, an increase of 131.8% year on year.
Kitchen appliances remain stable, and household appliances are quickly released. By product, in 2023, the company achieved revenue of 9.9 billion yuan/2.49 billion yuan/1.94 billion yuan, respectively; by region, domestic and foreign sales achieved revenue of 3.84 billion yuan/10.81 billion yuan, respectively; by region, domestic and foreign sales achieved revenue of 3.84 billion yuan/10.81 billion yuan, respectively; by sales model, ODM (OEM) /independent brands achieved revenue of 11.94 billion yuan/27.1 billion yuan, respectively.
Cost reduction and efficiency improved product profitability, and reduced exchange earnings dragged down net interest rates. The company's gross margin in 2023 increased 1.6 pp to 22.7% year on year, with gross margins of kitchen appliances/household appliances/other products being 24.3%/18.6%/19.2%, respectively, +2.5pp/ -0.6pp/-0.3pp; by sales model, ODM (OEM) /independent brand gross margins were 20.2%/33.9%, respectively, +2.3 pp/+0.8pp, respectively. The improvement in gross margin mainly comes from the company's technological innovation, production efficiency improvement and other cost reduction and efficiency measures; in terms of cost ratio, The company's sales/management/finance/R&D expenses in 2023 were 4%/5.9%/-0.6%/3.8%, respectively, +0.5pp/+0.1pp/+1.3pp/+0.3pp. The significant increase in financial expenses was mainly due to a decrease of 160 million yuan in exchange earnings in 2023 compared to the same period; in terms of net interest rate, the company's net interest rate decreased by 0.4 pp to 7.1% year on year.
Profitability remained stable in 24Q1. The company's gross margin for Q1 2024 was 21.9%, the same as the previous year. In terms of cost ratios, the company's sales/management/finance/R&D expenses rates in 2023 were 4%/5.5%/-0.9%/3.8%, respectively, -0.3 pp/ -0.3 pp, respectively. The decrease in financial expenses was mainly due to an increase of 78.86 million yuan in exchange earnings over the same period last year. Looking at net interest rates, the company's net interest rate increased by 0.1 pp to 5.5% year-on-year in Q1 in 2024.
Profit forecasting and investment advice. As a leading export enterprise in the small home appliance industry, the company has built a multi-brand matrix and continues to expand the new category circuit. The company's 2024-2026 EPS is expected to be 1.39 yuan, 1.63 yuan, and 1.91 yuan respectively, maintaining a “buy” rating.
Risk warning: Risks such as export sales growth falling short of expectations, customer expansion falling short of expectations, and increased competition.