Key points of investment:
Incident: The company released its 23rd annual report and its quarterly report for '24, and achieved operating income of 22.78 billion yuan, up 1.3% year on year; net profit to mother of 3.04 billion yuan, up 12.9% year on year, net interest rate to mother 13.3%, up 1.4 pct year on year; net profit after deducting non-return to mother of 2.75 billion yuan, up 5.9% year on year, net interest rate of 12.1% year on year, increase of 0.5 pct year on year.
Looking at a single quarter, 23Q1-24Q1 achieved operating income of 35.7/67.2/62.2/3.62 billion yuan, a year-on-year change of -13.8%/+13.0%/+2.2%/+0.1%/+1.4%; net profit to mother of 1.5/9.8/11.8/7.3/220 million yuan, a year-on-year change of -39.8%/+28.1%/+21.1%/+4.0%/+43.0%.
The company's consolidated gross margin in '23 was 34.2%, an increase of 2.5 pct over the same period last year. The cost rate for the period was 18.4%, an increase of 1.1 pct over the previous year. Among them, the sales/management/R&D/finance rate was 8.7%/6.2%/4.9%/-1.4%, respectively, with a year-on-year change of +1.2pct/ +0.2pct/-0.1pct/-0.3pct. The 24Q1 consolidated gross margin was 30.0%, an increase of 3.3 pct over the same period. The cost rate for the period was 24.4%, an increase of 2.8 pct over the same period. Among them, the sales/management/R&D/ finance rate was 11.6%/8.2%/6.2%/-1.6%, respectively, with a year-on-year change of +1.8pct/-0.5pct/+1.0pct/+0.5pct.
By product, kitchen cabinets/ wardrobes and accessories/ bathroom/ wooden doors achieved revenue of 70.3/119.5/11.3/1.38 billion yuan respectively, a year-on-year change of -2.0%/-1.6%/+9.0%/+2.4%, and revenue accounts for 30.9%/52.5%/5.0%/6.0%, respectively; gross margins were 34.3%/36.5%/25.9%/21.5%, with year-on-year change of +0.3pct/+4.7pct/-0.3pct/+5.1pct. Revenue from wardrobe and accessories declined in '23, mainly due to the company's supply chain optimization and adjustment of wardrobe accessories, and the phased decline in revenue from accessories.
Direct sales channels have performed brilliantly, and retail businesses are constantly iterating. By channel, dealer/direct-run store/bulk business revenue in '23 was 175.7/8.3/3.59 billion yuan, a year-on-year change of -0.04%/+17.4%/+2.6%; gross margin was 33.9%/57.7%/25.6%, respectively, with a year-on-year change of +3.2pct/+2.2pct/-2.2pct.
By brand, in '23, the Opal brand/Opal brand/Oppony brand/Bonis brand achieved revenue of 186.7/13.8/13.8/870 million yuan, a year-on-year change of -0.75%/+2.8%/+2.4%/+76.7%; gross margins were 34.2%/37.2%/21.5%/35.3%, respectively, with a year-on-year change of +2.2pct/+2.7pct/+5.1pct/+2.4pct.
Profit forecast and rating: We expect the company's net profit for 24-25 to be 31.9/3.46 billion yuan, an increase of 5.1%/8.4%. The current closing price corresponds to PE 13/12 times, respectively. Referring to comparable companies, the PE valuation was 16-17 times in 24 years. The corresponding reasonable value range was 83.79-89.03 yuan, giving it a “superior to the market” rating.
Risk warning: downside risks in the real estate industry, risk of category and channel expansion falling short of expectations, risk of fluctuations in raw material prices, and intensification of industry competition.