Description of the event
The company disclosed its 2023 annual report: In 2023, the company achieved revenue of 2,139 billion yuan, a year-on-year decrease of 6.03%, a year-on-year decrease of 21.39%, and realized net profit of 268 million yuan, a year-on-year decrease of 3.4%. Of these, 2023Q4 achieved revenue of 569 million yuan, a year-on-year decrease of 10.45%, and realized net profit attributable to mother of 0.25 million yuan, a year-on-year decrease of 74.24%, and realized net profit without return to mother of 65 million yuan, a year-on-year decrease of 20.06%. At the same time, the company distributes a cash dividend of 6 yuan (tax included) for every 10 shares to all shareholders.
Incident comments
Affected by external factors, the scale of revenue declined slightly, and online performance is still leading the industry. The company's revenue fell 6.03% year on year in 2023, mainly due to poor performance of the integrated stove business: 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. The downturn in the real estate sector suppressed new demand in the market 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. The retail volume was 2.78 million units, down 4.2% year on year. The company has always been guided by market demand, driven by R&D innovation, and has continuously designed and developed a series of products with strong competitiveness in terms of quality, appearance, and functionality. For example, the X5 Pro integrated stove promoted by the company during the reporting period uses a new Galaxy platform, is equipped with a third-generation high-performance inverter motor, and is supported by six core patented technologies such as a patented double-layer micro-pressure injection smoke chamber, V-shaped noise reduction blower, and a fully enclosed multi-layer microporous volute shell. While improving the fume absorption rate, the company maintained an ultra-low noise of 49.5 dB. In addition, the company continues to develop online channels. In 2023, the online retail sales of the company's integrated stoves reached 1.36 billion yuan, with a market share of 26.8%, and online retail sales reached 125,000 units, with a market share of 19.4%. Online retail sales and retail sales volume have remained number one in the industry for many years. At the same time, the company is accelerating its offline market layout. By the end of 2023, the number of the company's specialty stores had exceeded 2,100, and the channels were reduced to small stores in Jingdong, Tmall Premium, Suning Retail Cloud, etc. With the expansion of offline contacts, the company leverages its brand and product advantages or is expected to drive the line. Next increase in share.
The profitability phase is under pressure, and the quality of operations has improved. The company's gross margin in 2023 was 47.63%, an increase of 2.63 pct over the previous year. It is expected that the average price increase of the company's integrated stove products during the reporting period, as well as the results of production efficiency optimization and product yield improvements brought about by digital construction will continue to show. In terms of expense ratio, the company's sales expense ratio in 2023 increased by 0.86 pct year on year, mainly due to a decrease in revenue scale. The management expense ratio increased by 1.24 pct year on year, mainly because employee remuneration increased by 0.68 pct year on year, or because the company increased research and development efforts for new products during the reporting period, which combined to reduce the company's operating profit in 2023 (gross profit - taxes and accessories - sales management and R&D expenses plus credit and asset impairment losses) decreased 9.09% year on year. At the same time, the company's financial expenses ratio was optimized 0.3 pct year on year. The net profit margin for 2023 decreased by 2.26pct year on year, but net cash flow from operating activities increased sharply by 71.52% year on year, and the quality of operations improved.
Investment advice: As a leading enterprise in the integrated stove industry, the company has established an online and offline multi-channel sales system to increase consumer brand recognition. Despite fluctuations in the current consumption situation, the company's leading edge in the industry has been established, and it has stronger growth resilience and management efficiency. Based on the company's brand strength foundation and systematic management capabilities, it is expected to further maintain steady scale expansion and growth in business performance. Net profit attributable to 2024-2026 is estimated to be 2.89, 3.16, and 350 million yuan, respectively, maintaining a “buy” rating.
Risk warning
1. Macroeconomic fluctuations bring the risk of reduced revenue delivery; 2. The sharp rise in raw material costs brings the risk of declining profitability.