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/ the 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 margin was 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: Considering the pressure from the external environment, we expect the company's net profit for 24-25 to be 31.9 (originally 36.51) /3.46 billion yuan, respectively, an increase of 5.1%/8.4%. The PE corresponding to the current closing price is 13/12 times, respectively. Referring to the comparable company, PE was valued at 17 times in 24 years (originally 26x in 2023), corresponding to the target price of 89.03 yuan (-33%), maintaining the “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.