Core views:
Gujia Home Furnishing released its 2023 Annual Report and 2024 Quarterly Report. In 2023, the company achieved revenue of 19.212 billion yuan, +6.67% year-on-year, and net profit of 2.06 billion yuan to mother, +10.70% year-on-year. The 23Q4 company achieved revenue of 5,076 billion yuan, +19.49% year over year, and net profit of 505 million yuan to mother, +23.46% year over year. The 24Q1 company achieved revenue of 4.350 billion yuan, +10.04% year over year; net profit to mother was 420 million yuan, +5.02% year over year, in line with expectations.
Domestic sales and household logic are progressing steadily, and high-potential categories are growing steadily. In 2023, sofa revenue was +4.21%, soft bed and mattress revenue +15.36% YoY, ancillary product revenue +0.39% YoY, and custom furniture revenue +15.57% YoY. Sofas are relatively stable, bedding and customization are growing rapidly as high-potential categories, and accessories are limited by consumer pressure and lackluster performance. By region, domestic revenue in 2023 was +6.13% year-on-year, and overseas revenue was +6.84% year-on-year. Domestic revenue was relatively stable, and overseas was low and high (23H1 overseas revenue -5.84% YoY).
23 years of improved profitability. The company's gross margin in 2023 was +2.0pct year on year, and 24Q1 gross margin was +1.0pct year on year. The scale effect of overseas bases was evident, reducing domestic costs and increasing efficiency and improving production efficiency.
The company's 2023 sales/management/R&D/finance expense ratio was +1.1/-0.2/-0.3/+0.7pct, which was relatively stable overall; the 2024Q1 sales/management/R&D/finance expense ratio was +0.5/+1.5/-0.2/-1.3 pct, and overall expenses were controlled.
Profit forecasting and investment advice. Net profit due to mother in 24-26 is estimated to be 23.0/26.8/3.07 billion yuan. Reference industry comparable companies give the company a reasonable valuation of 13xPE in 24, corresponding to a reasonable value of 36.34 yuan/share, maintaining a “buy” rating.
Risk warning. Prices of raw materials fluctuated, project commissioning fell short of expectations, and domestic and foreign demand declined.