The company released its 2022 annual report and 2023 quarterly report. In 2022, the company achieved revenue of 2.80 billion yuan (yoy +13.8%), net profit of 4.2 billion yuan (yoy +16.6%), after deducting net profit of non-return mother of 3.9 billion yuan (yoy +9.4%). Among them, 22Q4 achieved revenue of 82 billion yuan (yoy +0.2%), net profit of 160 million yuan (yoy +19.1%), and net profit of 150 million yuan (+46.1%) after deduction.
In 23Q1, the company achieved revenue of 630 million yuan (+22.8%), net profit of 80 million yuan (+44.7%), and net profit of the mother after deduction of 0.7 billion yuan (+40.0%).
Gross margin increased significantly after the price reduction of raw materials, and performance is expected to gradually improve. The company's gross profit margin in 2022 was 23.15%, a year-on-year decrease of 3.17 pct; the reason was the increase in the cost of raw materials such as polymer materials, rubber bands, and cartons. The cost of various raw materials declined in the second half of 2022, and the 22Q4 company's gross margin was 24.75%, an increase of 5.47pct over the previous year. The company's net profit margin in 2022 was 15.09%, an increase of 0.36pct over the previous year; among them, the net profit margin for Q4 2022 was 19.64%, an increase of 3.12pct over the previous year.
Plants at home and abroad have been relocated and constructed, and a number of new product research and development have been successfully completed. The relocation and construction of the Thai plant was completed and put into production, and the independent brand Sunnybaby has entered major supermarkets in Thailand and carried out simultaneous marketing. The construction of the Hubei Haoyue plant was completed. The plant area can serve 900 million people within a radius of 1000 kilometers in Xiaonan District, and has the advantage of faster logistics distribution. The company stepped up the development of new products and successfully developed products such as easy to put on and take off menstrual pants, easy to put on and take off baby pull-on pants, and new materials that are super breathable.
Strong promotion of private brands, effectively increasing market share. The company's own brand “Hope Baby” pioneered Douyin promotion channels, specially developed the “Made in China” series of baby care products to be sold on the Douyin channel, and was selected as “Douyin Super Emerging Brand of the Year 2022”. At the same time, through product category expansion, the company launched the Dafi brand, focused on personal care products, and carried out online omnichannel marketing and promotion.
Profit forecast and investment advice: The company's revenue for 2023-2025 is estimated to be 32.3/36.9/4.14 billion yuan, respectively, with a year-on-year increase of 15.3%/14.3%/12.3%; the net profit of the mother is 51/559/670 million yuan respectively, with year-on-year increases of 20.5%/+15.2%/+14.5% respectively. The corresponding PE is 17x/15x/13x, covered for the first time, giving a “buy” rating.
Risk warning: increased competition, rising raw material prices, performance forecasts and valuations falling short of expectations