Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 11.2 billion yuan, a net profit of 1.73 billion yuan, a year-on-year increase of 10.2% after deducting non-net profit of 1.584 billion, an increase of 7.06%; of these, Q4 2023 achieved revenue of 3.269 billion yuan, +7.7% year-on-year, net profit of 0.36 billion yuan, and +6.2% year-on-year. Non-net profit of 0.3 billion, -13.4% YoY. The company announced a planned dividend of 0.472 billion in 2023, with a dividend rate of 27.2%; in addition to the previous special dividend of 0.472 billion yuan, the total dividend rate will reach 54%. In the first quarter of 2024, revenue of 2.24 billion was achieved, and net profit to mother was 0.4 billion yuan, up 2.5% year on year, after deducting non-net profit of 0.353 billion, up 3.3% year on year.
Maintaining a leading position, the growth rate is better than that of the industry. In 2023, the kitchen appliance industry ushered in a recovery after 5 years of continuous decline. According to Aowei Cloud Network (AVC) retail data, the retail sales volume of China's kitchen and bathroom market reached 166.9 billion yuan in 2023, an increase of 5.3% over the previous year. Among them, the total scale of newly-needed categories (tobacco, stoves, electric heating, heating) was 99.8 billion yuan, an increase of 6.5% over the previous year; according to Aowei's online report, the market share of retail sales of kitchen appliance packages from the owner brand was 31.5%, an increase of 1 percentage point over the same period last year. Looking at revenue by business segment, the company's smoke machine revenue increased 10.1% year on year, and stoves increased 8.7% year on year, all exceeding the industry average.
The company's leading position is still stable. Compared with large white electricity, the market concentration of kitchen appliances is still low, and future market share growth will still be the main driving force for the company's growth.
The gross profit margin is stable, and the impact of bad debt risk continues to decrease. The company's gross net interest rate in 2023 was 50.6% and 15.3%. The gross net profit margin and various expense ratios remained stable. The company accrued bad debts of 77.536 million yuan in 2023. At the end of 2023, the difference between the company's accounts receivable balance and bad debt reserve balance was about 0.51 billion yuan, further reducing the risk of bad debts.
Launch a new equity incentive, partner shareholding plan, and shareholder return plan for the next three years. The company announced the 2024 equity incentive plan and the second partner shareholding plan, which all require 2023 revenue as a base, with a trigger value of 5% and a target value of 10% for the 2024-2026 compound revenue growth rate. At the same time, the company announced the 2024-2026 shareholder return plan. The profit distributed in cash accounts for no less than 50% of the net profit attributable to the owner of the parent company in the consolidated statement achieved in that year. We believe that in the current consumption environment, the company has set out the main lines and goals for the company's growth through a series of plans, while protecting shareholders' interests by increasing dividends to highlight the company's long-term investment value.
Profit forecasting and investment advice. As a leading kitchen appliance company, the company operates steadily, and there is still room for future concentration increase and new category growth. The company's EPS is estimated to be 2.02 yuan 2.18 yuan and 2.39 yuan respectively in 2024, giving the company a 15X valuation in 2024, corresponding to a target price of 30.3 yuan, maintaining a “buy” rating.
Risk warning: New product growth falls short of expectations, large fluctuations in raw material prices, and competition intensifies risks.