Core views
24Q1 revenue -8.17% year-on-year, mainly due to last year's high base and declining real estate completion area (24Q1 housing completed area decreased 20.7% year on year), 24Q1 bulk channel revenue fell 5.6% year on year; 24Q1 net profit was -50.8% year over year, mainly due to the year-on-year decline in the unit price of engineering channel products and the year-on-year decrease in government subsidies. Supported by completion, the company's revenue performance grew steadily in 2023, and dealer channels continued to be developed. 24Q1 dealers were 4,4559, a net increase of 7992 compared to the end of 23. In the short term, the company will accelerate the training and transformation of engineering agents, and dealers will maintain a rapid expansion trend. In the future, it is expected that large channels will drive growth. The company's cash dividend ratio in '23 reached 80.29%, and the corresponding dividend rate was 7.6% (calculated based on the closing price on May 7).
occurrences
The company released its 2024 quarterly report: 24Q1 revenue of 626 million yuan/ -8.17%, net profit of 28.7887 million yuan/ -50.79%, net profit after deducting non-return net profit of 19.1412 million yuan/ -50.02%; net cash flow from operating activities -207 million yuan, EPS (basic) of 0.16 yuan/share, and ROE weighted at 1.86% /-2.19pct.
The company released its 2023 annual report: 2023 revenue of 3.738 billion yuan/ +16.49%, net profit of 390 million yuan (-30 million yuan in the same period last year), net profit of 339 million yuan (-374 million yuan in the same period last year); net cash flow from operating activities of 424 million yuan/ -18.93%, EPS (basic) of 2.22 yuan/share, ROE weighted 26.45%. The company plans to pay a cash dividend of 17.80 yuan (tax included) for every 10 shares, corresponding to a dividend ratio of 80%.
Brief review
24Q1 performance is under pressure, and the agent channel is growing at an impressive rate. 24Q1's revenue was -8.17% year-on-year, mainly due to last year's high base and declining real estate completion area (24Q1 housing completed area decreased 20.7% year on year). 24Q1 bulk channel revenue fell 5.6%, of which direct management and agent channels were -36.6% and +45.1%, respectively; 24Q1 net profit was -50.8% year-on-year, mainly due to the year-on-year decline in the unit price of engineering channel products and the year-on-year decrease in government subsidies. The 24Q1 gross profit margin was 18.8% /-2.9pct, of which the gross profit margin for large channels was 14.8% /-5.9pct, under pressure or intensified due to competition.
Supported by completion, the company's revenue performance grew steadily in 2023, and dealer channels continued to be developed. The company's revenue in '23 was 3.78 billion yuan/ +16.49%, with net profit of 390 million yuan (-30 million yuan for the same period last year), corresponding to 23Q4 revenue +3.7%, net profit to mother of 99 million yuan (-333 million yuan in 22Q4). The steady increase in revenue in 23 was mainly driven by the recovery of completed construction, which was 998 million square meters/ +17%. The specific division of the company according to products and channels is as follows:
1) Channel division: There has been a high increase in agent channels in 23 years. The company's dealer channel, engineering channel, and agent channel revenue in '23 was 981, 13.39, and 1,110 billion yuan, with an increase of 11.94%, 12.38%, and 22.10%. Among them, the engineering channel developed the hardcover and rough market while opening up multiple tracks; in 2023, the number of agents continued to increase, and a complete agent service system was gradually formed. New businesses such as hotels progressed, and the share of the payment clearance business continued to increase. By the end of 23, it had more than 800 engineering agents. The dealer channel continues to increase the development and cultivation of various dealers and installation service providers. At the end of '23, the company had 36,567 dealers, a net increase of 11963 compared to the beginning of the year, and 44559 24Q1 dealers, a net increase of 7992 compared to the end of '23.
2) By product: In 2023, the company's revenue for sandwich molded doors, solid wood composite doors and cabinet products was 21.69, 8.29, and 232 million yuan, up 8.57%, 22.72%, and 11.80%. The company's wooden door business grew steadily and continued to expand into various categories such as windows, wall panels, cabinets, flooring, bathroom, and hardware.
A loss turned into a profit in '23, and 24Q1 profits were under pressure. The company's gross profit margin in 2023 was 26.0% /+2.16pct, mainly due to cost reduction and reduction in raw material procurement costs; sales, management, R&D, and financial expense ratios were 7.5%, 2.6%, 3.4%, and 0.4%, respectively, -1.9, -0.4, -0.5, and +0.0pct, and the company's net interest rate in 2023 was 10.4% /+19.9pct, mainly due to accruing large credit impairment losses in the third and fourth quarters of '22. The company continued to accrue credit impairment losses of $107 million, according to The preparation ratio for individual bad debts has reached 81.04%, and the accrual ratios for companies such as Evergrande, Sunshine City, and Huaxia Happiness have reached 90%, 70%, and 80%, respectively. The 24Q1 company's net profit margin was 4.6% /-3.98pct, of which the gross profit margin was 18.76% /-2.91 pct. The decline in 24Q1 gross margin was mainly due to a large decline in the gross margin margin of the engineering channel while the share of the low gross margin agent channel increased. 24Q1 sales, management, R&D, and finance expense ratios were 8.17%, 2.91%, 2.59%, and 0.42%, respectively, with year-on-year changes of +0.99, +0.21, -0.79, and -0.06pct.
Investment advice: Expected 24-26 revenue of 42.0, 46.8, and 5.18 billion yuan, up 12.4%, 10.7%; estimated net profit of 4.36, 4.90, 546 million yuan, +11.4% year-on-year, +11.4%. Corresponding PE is 9.5x, 8.4x, and 7.6x, maintaining a “buy” rating.
Risk factors: 1) The real estate industry continues to decline: The company is a post-real estate industry chain company, and currently the main demand comes from new home decoration, which is closely related to data such as real estate completion and sales. Among them, the bulk business is directly affected by the commencement of construction such as hardcover housing, etc., and the retail side business is affected by new home purchases and second-hand housing transactions. If real estate sales continue to decline, it may have an impact on market demand; 2) Industry competition intensifies: wooden door companies have low market concentration. Currently, there are many competitors in the industry. As competition in the industry intensifies, profitability may be affected; 3) Risk of raw material price fluctuations, etc.: If the price of raw materials fluctuates greatly, it will have a direct impact on the company's performance.