Introduction to this report:
The company's export sales are still in the order recovery stage, and it is expected to continue to grow; after the withdrawal of the domestic Morphy brand, investment will gradually increase, and subsequent revenue is expected to continue to recover and increase its holdings.
Key points of investment:
Considering that domestic sales demand is still slowly recovering, and industry competition has intensified, we lowered our profit forecast. The company's 2023-2025 EPS is 1.19/1.37/1.57 yuan, with an original value of 1.20/1.40/1.59 yuan, a reduction of -1%/-2%/-2%), +2%/+14% over the same period. Referring to the same industry, the target price was lowered to 19 yuan to maintain the “gain” rating.
Performance summary: In 2023, the company achieved revenue of 14.647 billion yuan, +6.94% year over year, performance of 977 million yuan, and +1.62% year over year; of these, Q4 revenue was 3.9 billion yuan, +31% year over year, and performance was 241 million yuan, +105% year over year.
Q4 Domestic sales revenue improved, and performance was in line with expectations. In terms of export sales, after Q3, the number of orders gradually increased after customer inventory was gradually digested, leading to a steady increase in export sales revenue. In 2023, the company achieved export revenue of 10.812 billion yuan, +11.08% year-on-year, and Q4 export revenue of 2.67 billion yuan, +52% year-on-year. In terms of domestic sales, the industry's consumer demand is slowly recovering. In 2023, the company's domestic sales were 3.836 billion yuan, -3.22% year-on-year; Q4 domestic sales revenue was 1,235 billion yuan, +1% year-on-year. The decline in the Q4 Mofei and Dongling brands is expected to narrow, leading to a correction in the company's overall domestic sales revenue. In addition, due to fluctuations in the exchange rate of RMB against the US dollar, exchange earnings in financial expenses in 2023 were -154 million yuan year over year, while the total investment losses and fair value change losses in forward foreign exchange contracts/options contracts were +5 million yuan year over year.
Looking ahead to 2024Q1, the company's export sales are still in the order recovery stage and are expected to continue to grow.
Risk warning: Demand recovery from overseas orders falls short of expectations, increased industry competition puts pressure on domestic sales profit margins, and there is a risk that raw material prices will fluctuate.