Description of the event
The company disclosed the 2023 annual report & 2024 quarterly report: The company achieved revenue of 14.647 billion yuan in 2023, up 6.94% year on year, realized net profit of 977 million yuan, up 1.64% year on year, net profit after deducting 996 million yuan, down 0.51% year on year. Of these, it achieved revenue of 38.92 billion yuan in a single quarter, up 30.66% year on year, realized net profit of 241 million yuan, up 105.07% year on year, achieved net profit without return to mother of 195 million yuan, an increase of 180.72% year on year In addition, the company plans to distribute a cash dividend of 4 yuan (tax included) for every 10 shares; in Q1 2024, it achieved revenue of 3.474 billion yuan, a year-on-year increase of 22.79%, net profit to mother of 173 million yuan, an increase of 24.74% over the previous year, and net profit after deducting non-return to mother of 213 million yuan, an increase of 131.83% over the previous year.
Incident comments
Export sales maintained a high growth rate, and domestic sales gradually improved, jointly helping to welcome higher growth under a low revenue base. The company's revenue for the full year of 2023 was +6.94% year over year, and 2024Q1 revenue was +22.79% year over year. By category, kitchen appliances, household appliances and other products in 2023 were +4.08%/+20.41%/+3.14%, respectively. In terms of domestic and foreign sales, export sales were +11.08% year-on-year in 2023, of which 2023Q3/Q4 was +37.85%/+51.59%, respectively, 2024Q1 export sales maintained a high growth rate, or mainly benefited from overseas gradually entering the inventory replenishment cycle starting in the second half of 2023. Demand is strong, and export sales are expected to continue to grow at a high rate in the second quarter; domestic sales are expected to continue to grow at a high rate in the second quarter; of these, 2023Q3/Q4 were -13.93%/+0.55%, respectively. The 2024Q1 domestic sales ratio was +7.00%, showing a quarterly improvement trend. In recent years, the company raised the domestic sales business to the same important strategic position as the export business, adopted the “hot product+content marketing” method, established a “product manager+content manager” two-wheel drive mechanism, and gradually transitioned this method to the company's other independent brand businesses on the basis of the positive results achieved by the Morphy brand.
The 2024Q1 quarterly gross margin increased, and the operating expense ratio declined, leading to an increase in the company's profitability. The company's gross margin for 2023/2023Q4/2024Q1 reached 22.74%/23.39%/21.92%, respectively, +1.62/ -0.47/+0.03pct year-on-year, respectively. On the cost side, the company's sales, management, R&D and financial expenses for the full year of 2023 were +0.46/+0.29/+1.26pct, respectively. The financial expense ratio increased significantly, mainly because the company's exchange earnings decreased by 159 million yuan compared to the same period last year. In 2023, the company actively used hedging tools to lock in exchange rate effects. Among them, exchange gains in financial expenses reached 855.42 million yuan, while losses in hedging reached 794.718 million yuan. The impact of the exchange rate on the performance was basically positive and negative; the impact of the exchange rate on the performance of the 2024Q1 company was basically positive and negative;'s finance and management R&D expenses were +14.31%/+7.51%/+13.90%, respectively. Under the dilution effect, sales, management, and R&D rates were -0.29/-0.78/ -0.3 pct year over year, respectively. Combined with factors that increased exchange earnings, the financial rate was -2.00 pct year over year. Combining the above effects, the company's net profit attributable to mother in 2023/2024Q1 was +1.64%/+24.74%, respectively, and the net profit margin to mother reached 6.67%/4.97%, respectively, corresponding to a year-on-year change of -0.35/0.08pct.
Investment advice: The company is committed to establishing a diversified technical service system for the small household appliance industry, providing customers with a package of solutions including market strategy, design research, product implementation, mold development, certification testing and mass production technology, while vigorously developing the domestic market to better meet consumers' personalized quality of life needs. On this basis, the company has successively adopted cost reduction and efficiency measures such as technological innovation and production efficiency improvement, and the company's overall competitiveness has been gradually improved. We expect the company's 2024-2026 net profit to be 11.34 billion yuan, 12.65 billion yuan, and 1.41 billion yuan, respectively, corresponding to PE of 11.65, 10.45, and 9.37 times, respectively, maintaining a “buy” rating.
Risk warning
1. Risk of income fluctuations due to adjustments in the global economic situation;
2. Fluctuations in raw material prices have an impact on profits.