The company released its FY2024 financial report: FY2024 achieved operating income of HK$18.411 billion (+6.1% YoY) and net profit of HK$2.02 billion (YoY +20.2%); Single H2 revenue +18.4% YoY and net profit +41.7% YoY. The business performance is impressive, the position of a global leader in functional sofas is stable, and the prototype for large households is beginning to take shape.
Domestic sales: FY2024 achieved domestic sales revenue of HK$11.987 billion (+8.1%, RMB caliber +12.8%); by category, sofas and accessories achieved revenue of HK$7.782 billion (YoY +3.1%), mattresses and accessories achieved revenue of HK$2,988 billion (YoY +9.6%); as of March 31, 2024, the company had 7,236 stores (net +765). The product side continued to innovate, highlighting smart channels+fashion+cost performance, deepening the layout of online and offline channels, and embracing new live broadcasts new The model selects and nurtures excellent dealers through “old with new, strong with weak”.
Export sales: FY2024 achieved export revenue of HK$6.153 billion (+3.2% YoY), of which the North American market revenue was HK$4.284 billion (YoY +2.3%), and FY2024H2 orders recovered to double digit growth (H2 North American market revenue +38.3% YoY); European and other markets had revenue of HK$1,195 billion (+2.9% YoY). We expect a significant increase in gross margin, mainly benefiting from lower raw material costs. FY2024H2 orders returned to high double-digit growth (H2 European and other market revenue same (Compared to +34.9%); The overseas production capacity layout is gradually improving. Vietnam's design production capacity is 3,500 cabinets/month, and Mexico's design production capacity is 1000 cabinets/month, and global competitiveness continues to strengthen.
Outstanding dividend rate and optimized operating capacity. FY2024 has a dividend payout ratio of 50.7%. It has maintained a high level of dividends for a long time and focuses on investor returns. FY2024 Company's inventory turnover days were 49 days (year-on-year - 22 days), accounts receivable turnover days were 33 days (year-on-year - 7 days), and accounts payable turnover days was 27 days (year-on-year - 9 days). Operating capacity improved markedly.
Profit forecast: We expect the company's net profit to be HK$25.9/28.8/3.18 billion for the 2025-2027 fiscal year (+12.3%/+10.6% YoY), and the corresponding PE is 11.1X/10.0X/9.0X, maintaining the “buy” rating.
Risk warning: the risk of raw material price fluctuations, the recovery of the real estate market falls short of expectations, and the recovery of export sales falls short of expectations.