Core views:
The company released its 2024 quarterly report. Seodaemun is a leading domestic company in functional shading materials. The company achieved revenue of 637 million yuan in '23, an increase of 27.69% over the previous year; net profit to mother was 901 million yuan, an increase of 11.08% over the previous year. 24Q1 achieved revenue of 165 million yuan, a year-on-year increase of 38.33%, and net profit to mother of 0.23 million yuan, an increase of 40.22% over the previous year. The performance growth performance was impressive.
Cross-border e-commerce has driven the rapid growth of the finished shading products business. By product, the company's revenue for shading fabrics/shading products/other businesses in '23 was 473/148.011 million yuan, up 9.7%/136.4%/356% year-on-year respectively. The finished shading products business maintained rapid growth, and cross-border e-commerce channel expansion had outstanding results, which is expected to drive the company's revenue side to maintain high growth. By region, revenue from mainland China and overseas regions increased by 13.4%/35.6% year-on-year respectively in '23, and export sales are expanding well.
Profitability improved significantly in 24Q1. The company's gross margin for 23 years was 38.7%, yoy+4.4pct, mainly due to declining raw material costs, increased capacity utilization, and an increase in the share of finished product businesses with high gross margins in the business structure. The 24Q1 company's gross margin/net margin reached 39.95%/14.14%, yoy+3.4/+1.7pct, compared with 23q4+1.1/+4.5pct, with significant improvement in profitability. On the cost side, the company's sales/management/R&D/finance expenses rate in '23 was 14.9%/6.0%/4.0%/-2.8%, +5.1/-0.5/+0.2/+1.1 pct, respectively. The company increased investment in e-commerce platforms, and the sales expenses rate increased. 24Q1 sales/management/R&D/finance expense ratios were +3.0/-0.2/+0.4/-1.2pct year-on-year, respectively, and -0.4/+0.3/-0.2/-0.8pct month-on-month, respectively.
Profit forecasting and investment advice. The company's net profit for 24-26 is estimated to be 1.2/16/210 million yuan, an increase of 30/37/ 28% year-on-year. Referring to comparable companies, considering that the functional shading circuit boom continues, the company achieved remarkable results by driving high growth in the finished shading product business through cross-border e-commerce channels and actively building a second growth curve. It gave the company a reasonable valuation of 25xPE over 24 years, corresponding to a reasonable value of 15.42 yuan/share, and for the first time, coverage gave it a “buy” rating.
Risk warning. Cross-border e-commerce business development falls short of expectations; raw material price fluctuations; exchange rate fluctuations; and increased industry competition.