Core views
The company achieved growth in 2023 and 2024Q1. Traditional smoke stoves are steady, leading the industry average in growth, and its leading position continues to be consolidated. At the same time, it is increasing the layout of products, channels and famous brands such as dishwashers and integrated stoves. Emerging categories have accelerated growth, multi-category advantages have expanded, and gross margin has declined due to falling demand in the kitchen appliance industry and rising raw material prices. The company focuses on channel transformation and brand marketing. As demand for new channel expansion and replacement increases, it will maintain a steady development trend in the future.
occurrences
On April 24, 2024, Boss Electric released the 2023 Annual Report and the 2024 First Quarter Report.
In 2023, the company achieved operating income of 11.02 billion yuan (YOY +9.06%), net profit of 17.33 billion yuan (YOY +10.20%), and net interest rate of 15.47% (YOY+0.16pct); of these, Q4 achieved operating income of 3.269 billion yuan (YOY +7.71%), net profit to mother of 360 million yuan (YOY -6.18%), and net profit of 11.01% (YOY-0.16pct). 2024Q1 achieved operating income of 2,237 billion yuan (YOY +2.75%), net profit to mother of 398 million yuan (YOY +2.49%), and a net margin of 17.81% (YOY-0.05pct).
Brief review
1. Revenue analysis: The advantages of traditional categories are increasing, and emerging categories are growing rapidly 1) The first category group: steady revenue and consolidation of advantages. Revenue of 8.462 billion yuan (YOY +8.95%) was achieved in 2023, accounting for 75.54%. Range hood: Revenue of 5.322 billion yuan (YOY +10.13%), accounting for 47.51%. GfK data showed that the industry's sales volume and sales volume were +2.2% and -1.2%, respectively. The Aowei report showed that offline and online sales market shares were 30.97% and 17.95%, respectively, ranking first. Gas stoves: Revenue of 2,671 billion yuan (YOY +8.71%), accounting for 23.84%. GfK data showed that industry sales volume and sales volume were -2.8% and -4.1%, respectively. The Aowei report showed that offline and online sales market shares were 30.02% and 12.44%, respectively, ranking first and third. Sterilizer: Revenue of 469 million yuan (YOY -1.71%), accounting for 4.19%. According to Aowei Cloud Network and company announcement data, retail sales of domestic sterilizers decreased by 1.1% year on year. Among them, the market share of offline retail sales of owner-brand sterilizers was 20%, ranking TOP2.
2) Second category group: short-term pressure, stable share. Achieved revenue of 827 million yuan (YOY -10.28%), accounting for 7.39%. All-in-one computers: Revenue of 687 million yuan (YOY -7.06%), accounting for 6.14%. Steam box: revenue of 68 million yuan (YOY -32.49%), accounting for 0.60%. Ovens: Revenue of 72 million yuan (YOY -12.20%), accounting for 0.65%.
According to the company's announcement data, the market share of the boss brand's all-in-one offline and online retail sales reached 31.45% and 15.06% respectively, ranking TOP1 and TOP3 respectively; the offline and online retail sales share of electric steamers reached 26.81% and 17.58% respectively, ranking TOP2 and TOP3 respectively; the offline retail sales share of electric ovens was 27.52%, ranking TOP2.
3) The third category group: leading growth, with dishwashers and heating prominent. Achieved revenue of 1,033 billion yuan (YOY +22.96%), accounting for 9.22%. Dishwasher:
Revenue of 760 million yuan (YOY +27.94%), accounting for 6.78%. According to Aowei Cloud Network and company announcement data, domestic dishwasher retail sales increased 9.6% year on year. Among them, the market share of offline and online retail sales of the boss brand embedded dishwashers reached 19.59% and 8.66% respectively, ranking TOP2 and TOP5 respectively. Water heaters: Revenue of 233 million yuan (YOY +21.17%), accounting for 2.08%. According to data from Aowei Cloud Network, domestic retail sales of electric heating and heating increased by 4.0% and 10.4%, respectively; the company's products are mainly gas water heaters, and the category has maintained a high growth trend. Water purifiers: revenue of 40 million yuan (YOY -25.41%), accounting for 0.36%. According to Aowei Cloud Network data, domestic water purifier retail sales increased 0.8% year on year.
4) Integrated stove: accelerated layout, leading growth rate. Achieved revenue of 464 million yuan (YOY +20.58%), accounting for 4.14%. According to Aowei Cloud Network data, domestic retail sales of integrated stoves decreased by 4.0% year on year.
5) Other small household appliances: achieved revenue of 111 million yuan, an increase of 63.16% over the previous year, accounting for 0.99%.
6) Other business: Achieved revenue of 305 million yuan, an increase of 5.11% over the previous year, accounting for 2.72%.
2. Profit analysis: The profit level is stable, and there is still room for improvement in the long term 1) Gross profit margin: Changes in product and channel structure, and the gross margin in 2023 was 50.65% (YOY+0.67pct), of which Q4 gross margin was 47.31% (YOY-1.14pct); 2024Q1 gross margin was 50.65% (YOY-4.14pct). The increase in gross margin for the full year of 2023 was mainly due to the decline in raw material prices. The decline in 2023Q4 and 2024Q1 gross margin was mainly affected by changes in product and channel structure, as well as the rise in copper prices since this year. By product, the gross margin of range hoods in 2023 was 53.99% (YOY+2.26pct), the gross margin of gas stoves was 55.77% (YOY+1.16pct), the gross margin of all-in-one machines was 50.97% (YOY+1.26pct), and the gross margin of dishwashers was 46.22% (YOY+1.29pct). Looking ahead to the increase in new product sales and raw material prices this year, gross margin is expected to maintain the Q1 trend.
2) Expense rate: Improve cost investment efficiency, increase interest income by 0.84 pct year on year, sales/management/R&D/finance rate increased by 0.84 pct year on year, and sales/management/R&D/finance cost rates were +1.36/-0.003/-0.35/ -0.16pct year on year, respectively. The cost ratio for the Q4 period increased 0.89pct year on year, and the sales/management/R&D/finance expense ratio was +3.40/-0.12/-0.96/-1.42pct, respectively; during the 2024Q1 period, the cost rate decreased by 4.82 pct year on year, sales/management/R&D/ Financial expense ratios were -4.16/+0.11/-0.04/-0.73pct year-on-year, respectively. Main systems: 1) 2024Q1 actively adjusts sales plans to improve cost investment efficiency; 2) Increased interest income.
2) Net interest rate: The net interest rate is stable, and revenue and profit grow at the same time
2023 net margin was 15.47% (YOY+0.16pct), of which Q4 net margin was 11.01% (YOY-0.16pct); 2024Q1 net margin was 17.81% (YOY-0.05pct). The company's net interest rate is stable, and revenue and net profit are expected to grow at the same time.
Investment suggestions: The company's traditional category advantages have improved, emerging categories and omnichannel growth are growing rapidly. The new round of equity incentive plans shows strong revenue growth, and the dividend ratio is steadily increasing. We predict that in 2024-2026, the company will achieve net profit of 19.37/21.56/2.60 billion yuan, corresponding EPS of 2.04/2.27/2.49 yuan, and the current stock price corresponding PE is 11.61/10.43/9.53 times, maintaining a “buy” rating.
Risk analysis
1) Industry competition has intensified: The kitchen appliance industry has entered an era of stock competition. There are many dimensions of competition. Enterprises need to develop in a balanced manner on the product side, service side, and marketing side. Currently, all types of enterprises have entered the kitchen appliance industry, and competition may further intensify.
2) Price fluctuations of raw materials: Raw materials are the main component and cost source of kitchen appliances. Prices of raw materials affect the profit level and performance of the kitchen appliance sector. Prices of raw materials fluctuate greatly, which is not conducive to the pricing and steady operation of kitchen appliance companies.
3) Fluctuations in the real estate industry: Kitchen appliances have immediate demand and high installation attributes. Relying on real estate momentum and offline consumption scenarios, the current demographic dividend and real estate momentum are gradually disappearing, the sales scale of new homes is shifting downward, and kitchen appliance sales may continue to be under pressure.