Performance summary: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 3.74 billion yuan, +16.5% year on year; realized net profit of 390 million yuan, which significantly reversed losses year on year; realized deducted non-net profit of 340 million yuan, which significantly reversed losses year on year. Looking at a single quarter, 2023Q4 achieved revenue of 1.03 billion yuan, +3.7% year on year; realized net profit of 100 million yuan to mother, reversing losses year on year. 2024Q1 achieved revenue of 630 million yuan, -8.2% year on year; realized net profit of 0.3 billion yuan, or -50.8% year on year; realized net profit without deduction of 0.2 billion yuan, -50% year on year. Revenue growth for the full year of 2023 was steady, and profits were drastically reversed. Revenue and profits were temporarily pressured by the high base in 2024Q1.
Gross margin improved in 2023, with good cost control. The company's overall gross margin in 2023 was 26%, +2.2pp; 2023Q4 gross margin was 29.1%, +11pp year on year, improving gross margin for the full year of 2023. By product, the gross margin of the company's sandwich molded door/solid wood composite door/cabinet products was 26.4% (+1.5pp)/22.8% (+2.8pp)/21.8% (+1.2pp), respectively. By channel, the company's distributors/bulk channels achieved gross profit margins of 24.2% (+2.5pp)/24.7% (+1.2pp), respectively. Among them, direct engineering/engineering agents in major channels achieved gross profit margins of 30.3% (+1.7pp)/17.8% (+1pp), respectively. In terms of cost ratio, the company's total expense ratio was 13.8%, -2.7pp year on year, and cost control was good. Among them, the sales expense ratio, management cost rate, financial expense ratio, and R&D expense ratio were 7.5%/2.6%/0.4%/3.4%, respectively, compared with -1.9pp/ -0.4pp/ -0.5pp. The decrease in the sales expense ratio was mainly due to the increase in the efficiency of retail channel expenses. In addition, the company accrued credit and asset impairment provisions for some accounts receivable and fixed assets totaling approximately $110 million. Taken together, the company's net interest rate in 2023 was 10.4%, reversing the loss year on year. Furthermore, the company's net operating cash flow in 2023 was $420 million, -18.9% YoY; accounts receivable as of the end of 23 million were $9.3 billion, +12.6% YoY. 2024Q1 gross margin was 18.8%, -2.9 pp year on year. The slight decrease in gross margin was mainly due to the decline in the gross margin of the engineering channel and the increase in the share of engineering agency channels with low gross margin. Among them, the gross margin of the dealer channel/direct engineering management/engineering agency channel was +0.1 pp/-3.3pp, and 24Q1 total cost ratio was 14.1%, +0.3 pp year on year, with sales/management/finance/R&D expense ratios +1pp/+0.2pp/-0.1pp/-0.8pp, respectively; 2024Q1 net The interest rate was 4.6%, 4pp year over year.
The dealer channel has been growing steadily, and the engineering agency channel has maintained a high growth rate. By sales model, the company's dealer channel achieved revenue of 980 million yuan in 2023, accounting for 26.2% (-1.1pp), and the dealer channel grew steadily under external environmental pressure; the bulk channel achieved revenue of 2.55 billion yuan, +17.0% year over year, accounting for 68.3% (+0.3%) of revenue, of which the direct engineering channel and agent channel achieved revenue of 1.34 billion yuan (+12.4%) and 1.11 billion yuan (+22.1% year over year), respectively, accounting for 35.8% (- 1.3pp), 29.7% (+1.4pp). The engineering agency channel is growing rapidly, and the engineering business cash flow continues to be optimized. By the end of 2023, the company had more than 36,000 franchised dealers of various types, an increase of about 50% over the previous year. At the same time, the company continued to expand its direct engineering and engineering agency business. It already had more than 100 direct engineering customers, more than 800 engineering agents, and added about 330 new engineering agents during the year. It is expected that the number will gradually increase after the training period for new agents. Looking at 2024Q1, the company's dealer channel revenue was 130 million yuan (-23.7%), and the bulk channel revenue was 450 million yuan (-5.6%), of which direct engineering and engineering agents each earned 180 million yuan (-36.6%)/250 million yuan (+45.1%). The number of engineering agency channels increased, and the direct engineering and dealer channels were pressured by the pace of real estate completion. As of the end of 2024Q1, the number of franchisees in the company was 4,559, a net increase of nearly 8,000 in the first quarter, and the number of franchisees is still expanding rapidly.
Production and sales are expanding steadily, and cabinet products are growing rapidly. By product, in 2023, the company achieved revenue of 2.17 billion yuan (+8.6%)/8.3 billion yuan (+22.7%)/230 million yuan (+11.8%)/300 million yuan (+71.5%). Cabinet products grew rapidly, mainly benefiting from the company's integrated door and wall cabinet products driven by associated sales growth. In terms of sales, the annual production and sales volume of molded plywood doors was 3.19 million sets (+13.4%)/3.483 million sets (+17.0%), respectively, and the annual production and sales volume of solid wood composite doors was 569,000 sets (+11.5%)/708,000 sets (+18.4%). Sales of main products all maintained a relatively rapid growth rate.
By brand, Oupai/Huamujiang achieved revenue of 3.3 billion yuan (+15.8%)/230 million yuan (+11.8%) respectively.
Profit forecasting and investment advice. EPS is estimated to be 2.52 yuan, 2.82 yuan, and 3.14 yuan respectively in 2024-2026, and the corresponding PE is 9 times, 8 times, and 7 times, respectively. Considering the company's outstanding manufacturing advantages, the revenue structure continues to be optimized to maintain a “buy” rating.
Risk warning: risk of changes in real estate policies; risk of increased market competition; risk of production progress falling short of expectations.