Incident: The company released its 2023 annual report and achieved revenue of 3.205 billion yuan, +10.34% year over year; net profit to mother of 413 million yuan, +41.37% year over year; realized net profit of 392 million yuan after deduction, +40.55% year over year; plans to distribute a discovery dividend of 5.5 yuan (tax included) for every 10 shares.
Comment:
Domestic sales were steady in 2023, and export sales were high. By category, in 2023, the company's commercial refrigerated display cases achieved revenue of 2,084 billion yuan, +17.93%; commercial refrigerated display cases achieved revenue of 569 million yuan, +5.05% year over year; supermarket display cases experienced a decline in revenue due to changes in individual customer business, achieving annual revenue of 224 million yuan, or -30.60% year over year; commercial intelligent vending machine customer coverage continued to expand, with annual revenue of 176 million yuan, +9.52% year over year. By region, the company's domestic sales and export sales achieved revenue of 2,138 million/971 million respectively in 2023, or +0.05%/+41.02% year-on-year. Among them, the export business was relatively good, driven by the rapid growth of commercial refrigerated display cases. Looking at a single quarter, 2023Q4 achieved operating income of 707 million yuan, +20.24% year over year; realized net profit of 57 million yuan, +140.08% year over year. Under the influence of low base and efficiency improvements, both revenue and performance growth increased sequentially.
Multi-factor optimization, continuous improvement in profitability. The company's comprehensive gross profit margin in 2023 was 29.66%, up 6.04pct year on year. We believe it mainly benefited from the company's scale effect, product & customer structure optimization, and reduction in raw material costs. Among them, the company's domestic and export gross margin increased by 3.22pct/9.99pct to 24.46%/40.59% respectively in 2023. In 2023, the company's sales/management/R&D/finance expenses rates were +2.35pct/+0.20pct/-0.28pct/+0.37pct to 7.60%/3.25%/3.39%/-1.15%, respectively. The year-on-year increase in sales expenses was mainly due to the increase in the company's sales and after-sales personnel and salary increases. Under the combined influence, the net interest rate in 2023 was +2.42pct year-on-year to 12.89%. We expect the company's net interest rate level to rise further as the scale effect of the company is released and the product structure is upgraded.
Domestic and foreign sales each have their own focus, and the market position is constantly improving. According to the company's annual report, (1) in the domestic market, the company's commercial refrigerated display case market position is stable; the commercial refrigerated display case customer structure continues to improve, and sales are growing rapidly; supermarket display cases have launched many new products, with good market results; the commercial intelligent vending cabinet product structure has been optimized and the share of frozen products has increased; (2) in foreign markets, the company's commercial freezers continue to grow rapidly, and commercial refrigerated display cases remain stable.
Investment advice: The company has established long-term stable cooperative relationships with many well-known domestic and foreign fast sales brands and channel providers, and the domestic and foreign sales network continues to expand, further strengthening its competitive advantage. We expect the company's net profit to be 470/5.40/599 million yuan respectively in 2024-2026, corresponding to the current market capitalization PE of 12/10/9 times, respectively, to maintain a “buy” rating.
Risk warning: New market expansion falls short of expectations, industry competition intensifies, raw material costs fluctuate greatly, etc.