The company released its 2023 annual report and 2024 quarterly report. Revenue in 2023 was 17.507 billion yuan, up 22.85% year on year; net profit to mother was 1,615 billion yuan, up 41.22% year on year, net profit after deducting non-return on mother was 1,344 billion yuan, up 71.88% year on year, diluted EPS was 3.96 yuan, weighted average return on net assets of 21.88%.
Net operating cash flow was 1,430 billion yuan, up 0.42% year over year.
1Q2024 achieved revenue of 4.38 billion yuan, up 30.09% year on year; net profit to mother was 311 million yuan, up 1.6% year on year, after deducting non-net profit of 315 million yuan, up 29.04% year on year, diluted EPS of 0.76 yuan, and weighted average return on net assets of 3.80%. Net operating cash flow of $181 million.
2023 dividend plan: A cash dividend of 20 yuan (tax included) will be distributed for every 10 shares, 0 bonus shares (tax included), and the capital reserve fund will be used to transfer 3 shares for every 10 shares to all shareholders. At the same time, the company plans to combine undistributed profits with current performance dividends for the 2024 half year.
Brief review and investment advice:
1. Revenue in 2023 was 17.507 billion yuan, up 22.85% year on year, of which 4Q revenue was 5.721 billion yuan, up 21.36% year on year. 2024Q1 achieved revenue of 4.378 billion yuan, a year-on-year increase of 30.09%.
Subregions: In 2023, North America, Europe, Japan, the Middle East, mainland China and other regions (mainly including Australia, Turkey, Southeast Asia, etc.) each accounted for 47.81%, 21.02%, 14.20%, 5.19%, 3.64%, and 8.14% of revenue, of which Australia contributed more than 662 million yuan in revenue.
By product: In 2023, revenue from charging and energy storage, intelligent innovation, and smart video accounted for 49.14%, 25.94%, and 24.48%, respectively, with revenue growth rates of 25.12%, 18.72%, and 26.47%, respectively.
By sales channel: In 2023, online and offline channels each accounted for 70% and 30%. Third-party platforms other than Amazon achieved total revenue of 1,067 billion yuan, an increase of 32.81% year on year; the total revenue of the six major independent websites was 1,244 billion yuan, an increase of 83.87% year on year, accounting for about 7% of total revenue.
2. The gross profit margin in 2023 was 43.54%, with a year-on-year increase of 4.81 pct. Among them, the gross margins of charging and energy storage, intelligent innovation, and smart video were 42.26%, 46.50%, and 43.52%, respectively, with a year-on-year increase of 0.40, 9.73, and 7.81 pcts; the 4Q2023 gross profit margin was 44.04%, up 5.6 pcts year on year. 2024Q1 gross profit margin was 42.12%, up 3.59pct year over year. Among the contributors to the increase in gross margin in 2023, procurement costs as a share of revenue decreased by 5.53 pct to 45.14% year on year, and transportation costs as a share of revenue increased by 0.72 pct to 11.32% year on year. Therefore, we judge that the sharp increase in gross margin mainly comes from supply chain cost reduction and efficiency and exchange rate fluctuations.
3. Continue to strengthen research and development. The cost ratio for the 2023 period was 34.10%, of which sales, management, R&D, and finance expenses were 22.20%, 3.33%, 8.08%, and 0.49%, respectively, with year-on-year changes of 1.58, 0.07, 0.49, and 0.02pct, respectively. Sales expenses were split. In 2023, the sales platform fee increased by 24.09%, the fee rate was 7.83%, an increase of 0.08pct; the marketing fee increased by 38.89%, the fee rate was 8.63%, and the year-on-year increase was 1.00pct;
R&D expenditure rates for 021-23 were 6.19%, 7.58%, and 8.08%, respectively. R&D investment increased year by year. By the end of 2023, 1,918 R&D personnel accounted for 48%. Financial expenses in 2023 were $86 million, an increase of $19 million over 2022.
4. Net profit attributable to mother in 2023 was $1,615 million, up 41.22% year over year. Net income from fair value changes of $183 million; investment income of $71.53 million, a decrease of $46.9 million from 2022; confirmed asset impairment losses of $142 million in 2023, an increase of $1.82 million over 2022. The final net profit for 2023 was 1,615 billion yuan, up 41.22% year on year, and net profit after deducting non-return to mother was 1,344 billion yuan, up 71.88% year on year.
Net profit of 2024Q1 was 311 million yuan, up 1.6% year on year, after deducting net profit from non-return to mother was 315 million yuan, up 29.04% year on year. The growth rate of net profit after deducting non-net profit was higher than the growth rate of net profit attributable to mother, mainly due to losses in fair value changes in fair value in the first quarter due to falling market prices in the first quarter, and losses of foreign exchange forward contracts with invalid hedging due to market exchange rate fluctuations in the first quarter, which led to large amounts of non-recurring profit and loss.
5. Continuous product innovation helps steady development. In 2023, the company focused on the continuous development of its core business, concentrating resources on strategic key categories, actively exploring and expanding the global market, and committed to building a platform that empowers global smart hardware entrepreneurs. The three major product lines continue to launch innovative products. (1) Charging and energy storage category: The Anker brand, which focuses on the field of digital charging, has launched various innovative digital charging solutions and is committed to improving the intelligence and flexibility of charging technology. It successfully launched the consumer-grade new energy brand series Anker SOLIX, which aims to provide green energy solutions for all home and outdoor scenes; (2) Intelligent innovation category: The company has released various innovative products in smart home security, smart cleaning and other innovative fields, such as dual camera cameras and deep cleaning sweepers suitable for different scenarios All-in-one eufy Clean X9 pro, second-generation AnkerMake M5C high-speed 3D printer, etc.; (3) Smart video: The company is committed to in-depth exploration and meeting the segmented needs of users, launched multiple audio product lines in the field of smart wireless Bluetooth headsets and wireless Bluetooth speakers, the world's first portable high-fidelity spatial audio Bluetooth speaker, Motion X600, etc., and launched the world's first true outdoor portable projector Mars S3 in the field of smart office hardware. Innovative products such as the AnkerWork M650.
Maintain judgment on the company. The company is the world's leading consumer electronics brand with strong core competitiveness: ① Continuous innovation product capabilities: The company continues to promote the three major product lines. Among them, energy storage products have been rapidly launched in recent years, which is expected to drive the upgrading of Anker's main brand strategy. ② Excellent supply chain management capabilities: Since 2023, the company's gross margin has increased significantly in every quarter. Our judgment is mainly due to the contribution of supply chain cost reduction and efficiency and exchange rate fluctuations. ③ Omni-channel operation capability: The company has formed a multi-channel layout such as Amazon, other third-party platforms, and independent websites online, accounting for about 30% of offline revenue.
Updated profit forecast and valuation: Excluding large non-recurring profits and losses, we expect the company's 2024-2026 revenue to be 21.9 billion yuan, 26.4 billion yuan, 31.2 billion yuan, up 25%, 21%, and 18% year-on-year increase, with net profit attributable to mother of 1,815 billion yuan, 224.1 billion yuan, and 2,729 billion yuan respectively, giving 2024 20-25 times PE, corresponding to a reasonable market value range of 36.3 billion yuan to 45.4 billion yuan per share, maintaining a “superior to the market” rating.
Risk warning: changes in market demand, risk of inventory management, uncertainty in the global economic and political environment, etc.