Description of the event
The company disclosed its 2023 annual report: In 2023, the company achieved revenue of 1,227 million yuan, a year-on-year decrease of 3.8%, a year-on-year decrease of 14.64%, and realized net profit of 165 million yuan, a year-on-year decrease of 6%. Of these, 2023Q4 achieved revenue of 283 million yuan, a year-on-year decrease of 9.56%, realized a net profit of 3.97 million yuan, a year-on-year decrease of 91.87%, and realized net profit without return to mother of 10.45 million yuan, a year-on-year decrease of 65.22%. At the same time, the company pays a cash dividend of 10 yuan (tax included) for every 10 shares, and uses the capital reserve fund to transfer 3 shares for every 10 shares to all shareholders.
Incident comments
Affected by the external environment, revenue performance was under pressure at the stage, but the market share increased. In 2023, the company's revenue fell 3.8% year on year. The integrated stove category accounted for nearly 90% of the company's overall revenue during the reporting period, so the decline in revenue scale was mainly due to poor performance in this business segment: according to data from the National Bureau of Statistics, the sales area of commercial housing in China fell 8.2% year on year in 2023, and the downturn in the real estate sector suppressed new market demand and had a great impact on the kitchen appliance market. According to AVC (AVC) summary data, retail sales of integrated stoves in China during the reporting period were 24.9 billion yuan, down 4% year on year, and retail sales volume was 2.78 million units compared to the same period. It fell 4.2%. Looking at the Shan Yitian brand, in 2023, the online sales volume of Yitian integrated stoves fell 7.9% year on year, and sales fell 3.9% year on year. Offline sales increased 127.6% year on year from last year's small base, and sales increased 91% year on year. Due to the large online share, the omni-channel sales volume of Yitian integrated stoves fell 5.12% year on year, and sales fell 1.6% year on year. Although the sales/sales ratio declined due to the downturn in the real estate industry, the company continued to promote technological innovation and transformation of achievements during the reporting period, promote product iteration, accelerate product quality upgrades and performance improvements, and continue to strengthen brand awareness in the middle and high-end market through marketing methods. It still ranks first in the Chinese integrated stove industry. The share of online sales increased by 0.6 pct to 11.4%, and the share of sales increased by 1.9 pct to 15.6%. The share of offline sales increased by 4.9 pct to 11.8%, and the sales share increased by 3.9 pct to 3.9 pct to 3.9 pct to 11.9%
Gross margin improved year-on-year, expense ratios increased, and operating profit declined. The gross margin in 2023 increased 2.04 percentage points over the same period last year, or mainly benefited from the company's deepening data intelligence-driven operating model, forming a good industrial internet network between upstream and downstream supply chains, industry enterprises, etc., and fully realized the deep use of internal and external data in the production process through the establishment of a global data management system, greatly reducing energy consumption and costs per unit. In terms of expense ratio, the company's sales expense ratio increased by 1.16 pct year on year, or due to the company's efforts to expand e-commerce channels, widening home improvement, KA channels, and adding sinking channel outlets during the reporting period. The management cost increased by 2.43 pct year over year, mainly due to increased depreciation expenses after the conversion of fund-raising projects. R&D expenses increased by 0.5 pct year on year, combined to make the company's operating profit in 2023 (gross profit - tax and additional - sales & management & R&D expenses + credit and asset impairment losses) was 153 million yuan, down 12.45% year on year. The financial expense ratio increased by 0.05 pct year on year, which ultimately reduced the net profit margin to mother by 1.85 pct year on year. In addition, net cash flow from the company's operating activities decreased by 7.42% year-on-year in 2023, mainly due to a decrease in sales repayments in the current period.
Investment advice: With the support of a perfect channel system, the company is expected to withstand the impact of short-term demand fluctuations and achieve a more sustainable growth trend in the medium to long term through product iteration and marketing system promotion. The company's net profit for 2024-2026 is estimated to be 1.88, 2.05, and 224 million yuan, respectively, corresponding to PE of 17.36, 15.95 and 14.56 times, maintaining a “buy” rating.
Risk warning
1. The risk of falling market demand due to a slowdown in macroeconomic growth; 2. The sharp rise in raw material costs brings about a risk of declining profitability.