Core views
The company released its 2024 quarterly report. 24Q1 achieved operating income of 716 million yuan, an increase of 7.69% year on year; 24Q1 achieved net profit attributable to the parent company of 0.23 million yuan, up 0.52% year on year; net profit attributable to the parent company after deducting non-recurring profit and loss, increased 0.32% year on year. Looking at the full year of '23, the company achieved operating income of 3.153 billion yuan, a year-on-year decrease of 4.64%. The company achieved a gross profit margin of 30.76%, an increase of 1.27 pct year on year. 100 million yuan, a year-on-year decrease of 42.93%, achieving a net profit margin of 3.28%, a year-on-year decrease of 2.35 pcts.
occurrences
The company released its 2023 annual report and 2024 quarterly report.
In '23, the company achieved operating income of 3.153 billion yuan, a year-on-year decrease of 4.64%. Net profit attributable to shareholders of the parent company was 109 million yuan, a year-on-year decrease of 42.93%, and net profit attributable to mother after deducting non-recurring profit and loss of 100 million yuan, a year-on-year decrease of 44.39%.
24Q1 achieved operating income of 716 million yuan, an increase of 7.69% year on year, net profit attributable to shareholders of the parent company of 223 million yuan, an increase of +0.52% year on year, and net profit from recurring profit and loss to mother of 100 million yuan, a year-on-year decrease of 44.39%.
Brief review
1. Revenue level: 23 years were greatly affected by business divestment factors. 24Q1 Lightweight achieved revenue of 3.153 billion yuan in 2023, down 4.64% year on year. Looking at split categories, 1) household environmental products achieved revenue of 1,389 billion yuan, a year-on-year decrease of 10.22%; 2) Water health products achieved revenue of 1,164 billion yuan, an increase of 10.31% year on year, mainly driven by the company's own new products; 3) Personal health care products achieved revenue of 575 million yuan, a year-on-year decrease of 1.38%; 4) Household and sanitary products achieved revenue of 1.38% year on year Revenue of 4.4257 million yuan was achieved, a year-on-year decrease of 95.72%. The sharp decline in revenue was mainly affected by the company's focus on core brands and categories and gradually divesting itself of business investment related to the “Vantage” brand.
Looking at domestic and foreign sales, the company achieved domestic revenue of 2,569 billion yuan in 23 years, down 10.06% year on year. Overall, in addition to being affected by business divestment factors, it is also expected to have some relationship with the overall pressure on the domestic demand environment; overseas sales achieved operating revenue of 584 million yuan, an increase of 29.77% year on year, and the overall growth rate of export sales is relatively good. Looking ahead, with continued channel expansion and a rich product matrix, the company is expected to build further export sales growth.
24Q1 achieved revenue of 716 million yuan, a year-on-year increase of 7.69%. After getting rid of the impact of business divestment factors, the company's domestic and foreign sales are expected to show single-digit year-on-year growth.
II. Profitability
From a gross margin perspective, the company achieved a gross profit margin of 30.76% in '23, an increase of 1.27pct over the previous year. The year-on-year increase is mainly expected to account for a higher share of overseas businesses with higher profitability, and the raw materials side also made a certain contribution. Entering 24Q1, the company achieved a gross profit margin of 30.86%, an increase of 1.36pct over the previous year.
From the perspective of cost rates, the company's sales, management, R&D, and financial expenses rates were +3.79pct/+0.38pct/+1.09pct/-0.7pct, respectively. Overall, due to factors such as intense platform traffic competition and the company's increased marketing and promotion efforts, the company's sales expenses rate increased. The increase in the R&D cost rate is expected to be directly related to the company's own pace of new product development; the financial cost ratio is affected by factors such as capital management efficiency, and earnings have increased. The 24Q1 company's sales, management, R&D, and financial expense ratios were +2.48pct, -0.21pct, +0.73pct, and -0.77pct, respectively.
From a net profit perspective, in '23, the company achieved net profit of 109 million yuan, a year-on-year decrease of 42.93%, a year-on-year decrease of 3.28%, a year-on-year decrease of 2.35pct. The split was mainly affected by significant factors of increased expenditure; the 24Q1 company achieved net profit attributable to the parent company of 0.23 million yuan, an increase of 0.52% over the previous year, and realized net profit of 0.32% over the previous year.
Investment advice: We expect the company to achieve operating income of 35.95, 40.26, and 4.469 billion yuan respectively in 24-26, with year-on-year increases of 14%, 12%, and 11%, respectively; net profit attributable to the parent company of 1.26, 1.42, and 159 million yuan, respectively, with a year-on-year increase of 15.96%, 12.93%, and 11.92%, respectively. I am optimistic that the company will continue to enrich its product matrix in domestic and overseas markets, continue to develop channels, and maintain its buying rating.
Risk warning:
1) Risk of slowing industry growth: The macroeconomic environment is complex and changing. As an optional consumer product, the overall development of the industry is under pressure. According to data from the National Bureau of Statistics, retail sales of domestic products rose 5.8% year on year in 2023, household appliances and audio-visual equipment increased 0.5%. The recovery in home appliance consumption lags behind the overall market recovery, and the market is facing major challenges. In recent years, as consumer demand has become more rational, the small household appliance industry has gradually transitioned from a dividend period to a mature period. The market has entered a stage of stock competition. Industry competition continues to intensify, and there is a risk that industry growth will slow down, which has had a certain impact on the company's revenue and profitability.
2) Market competition has increased risk: In recent years, with the continuous increase in residents' income levels, channel changes in the home appliance industry, and the continuous launch of innovative products, a number of home appliance companies with a small number of explosives as the core have emerged in the industry. At the same time, home appliance giants in the industry have also continued to enter the field of small household appliances, and market competition has further intensified. Although the company has shown a good development trend since its inception, increased market competition has brought uncertainty about whether the company can maintain its past growth rate. During the reporting period, the company actively exploited consumer demand and continued to develop innovative products. Price cuts for old products had little impact on the company's overall gross margin, but were affected by fierce market competition. The technology for small household appliances continued to iterate, and there was a certain risk of price cuts for old products. If the company cannot continue to be consumer-centered and keep up with consumer trends in R&D, design and production, it may face the risk of declining market share and profitability.
3) Risk of slowing online sales growth: As the e-commerce industry enters maturity, the increase in online shopping users is stabilizing, the dividend effect of internet traffic gradually weakens, traffic growth rate slows down, e-commerce competition intensifies, online traffic costs gradually increase, compounding the trend of slowing growth in the small home appliance industry. Online sales of small household appliances are greatly affected, and online sales growth is at risk of slowing down, which has a certain impact on the company's online sales revenue