2024Q1's operating pressure is obvious. Considering that the new business is expected to contribute to growth, it maintains a “buy” rating of revenue of 1,227 billion yuan (-3.80%, same below), net profit to mother of 179 million yuan (-14.64%), and deducts non-net profit of 165 million yuan (-6.00%). 2024Q1's revenue was 127 million yuan (-44.49%), net profit to mother was 0.05 billion yuan (-88.88%), and net profit after deducting non-return to mother -01 million yuan (-102.58%), mainly due to the Spring Festival factors, the short start time for construction. Considering the sluggish demand in the integrated stove industry and the pressure on 2024Q1 operations, we lowered 2024-2025 and added a profit forecast for 2026. The company's net profit for 2024-2026 is 2.0/2.2/230 million yuan (the original value for 2024-2025 was 2.4/260 million yuan), the corresponding EPS is 1.9/2.0/2.2 yuan, and the PE corresponding to the current stock price is 15.0/14.0/13.0 times. Considering the company's continuous marketing channel changes, the new business is expected to contribute incrementally and maintain “purchases” “Enter” rating.
Direct sales revenue grew rapidly. The number of dealers reached a record high after the trade was built and the channel continued to expand revenue by product. In 2023, the company's integrated stove/other product revenue reached 10.95/132 million yuan respectively, -5.76%/+16.29%, respectively, and accounted for 89.26%/10.74% of revenue, respectively. By sales model, in 2023, the company's distribution/direct sales achieved revenue of 982/246 million yuan respectively, -9.42%/+28.06% compared with the same period, accounting for 80%/20% of revenue, respectively. Online channels, the total turnover of the company JD/Tmall in 2023 was 55/ 360 million yuan respectively, +6.57%/+17.67% year-on-year respectively; total turnover was 90 million yuan (+10.68%). In terms of channel expansion, by the end of 2023, the company had more than 1,500 dealers, covering 31 provinces (autonomous regions and municipalities directly under the Central Government) across the country.
Expense investment increased, net interest rate decreased
The company's gross profit margin in 2023 was 48.66% (+2.04pcts), and the 2024Q1 gross profit margin was 44.64% (-0.78pcts).
Gross margin by product. The gross margin of the company's integrated stoves and other products in 2023 was 49.93%/38.13%, respectively, +1.54/+9.64pcts year-on-year, respectively. Looking at gross margin by sales model, the gross margin of distribution/direct sales in 2023 was 46.71%/56.49%, respectively, +1.08/+4.24pcts year-on-year, respectively. On the cost side, the company's expense ratio was 33.33% (+4.14pcts) in 2023, with sales/management/ R&D/finance expense ratios +1.16/+2.43/+0.50/+0.05pcts year-on-year, respectively. The 2024Q1 company's cost ratio for the period was 45.21% (+16.28 pcts), with sales/management/R&D/finance expenses ratios of +9.94/+4.19/+1.75/+0.40pcts, respectively. Under the combined influence, the company's net interest rate to mother was 14.59% (-1.85pcts) in 2023, after deducting the net interest rate of 13.41% (-0.31pcts); the 2024Q1 net interest rate to mother was 3.57% (-14.25 pcts), after deducting the non-net interest rate of -0.78% (-17.51 pcts).
Risk warning: risk of falling demand; risk of raw material prices; new product sales and new business development falling short of expectations.