Incident: Haoyue Nursing released its 2022 annual report and 2023 quarterly report. In 2022, the company achieved revenue of 2,802 billion yuan, an increase of 13.82% over the previous year; net profit of 423 million yuan, an increase of 16.60% over the previous year; after deduction, net profit of 386 million yuan, an increase of 9.36% over the previous year. Among them, in the 202Q4 quarter, the company achieved operating income of 817 million yuan, an increase of 0.19% over the previous year; Guimu's net profit was 161 million yuan, an increase of 19.10% over the previous year; after deduction, the net profit of Guimu was 151 million yuan, an increase of 46.05% over the previous year.
The 2023Q1 company achieved operating income of 623 million yuan for the quarter, an increase of 22.79% over the previous year; the net profit of the mother was 79 million yuan, an increase of 44.65% over the previous year; and the net profit of the mother after deduction was 72 million yuan, an increase of 40.00% over the previous year.
The growth of baby hygiene products has been steady. Looking at the increase in the average price of adult hygiene products by category, the company's baby hygiene products, adult hygiene products, and other products achieved revenue of 20.32/621/0.87 billion yuan respectively in 2022, an increase of 15.52%/6.15%/44.49% over the previous year.
Looking at the volume and price split, the sales volume of baby hygiene products and adult hygiene products in '22 was 2,619 and 734 million tablets respectively, +19.20% and +1.47% over the same period last year; the average price of a single tablet was 0.78 and 0.85 yuan/piece, respectively, -3.09% and +4.61% compared with the same period last year. Among them, the increase in the average price of adult hygiene products was mainly due to the increase in sales share of pant-shaped sanitary napkins. Relying on in-depth understanding of the market and innovation in process technology, the company has successfully developed products such as easy-to-wear and take off menstrual pants, easy to put on and take off baby pull-on pants, and new ultra-breathable materials, which are expected to contribute incrementally after future market promotion and application.
Looking at the subregion, domestic sales revenue in 2022 was 2,479 million yuan, an increase of 15.93% over the previous year; export sales revenue was 261 million yuan, down 1.84% from the previous year. Among them, 22H2 export revenue was 141 million yuan, an increase of 15.30% over the previous year. The construction of the company's plant in Thailand was completed in 2022, and production has been completed and put into operation one after another, and its own brand, Sunnybaby, has entered major supermarkets in Thailand and is being promoted. It is expected to accelerate the cultivation of consumers of local composite core structure diapers, which is expected to accelerate the growth of overseas business in '23.
Gross margin began to rise from the bottom in 23Q1. Expense control results were good, and in terms of profitability, the company's comprehensive gross margin in '22 was 23.15%, down 3.17pct from the previous year. Mainly influenced by the international crude oil market, procurement costs for major raw materials such as polymers, rubber bands, and cartons rose higher than the previous year. By product, in '22, the company achieved gross profit margins of 21.30% and 25.06% for baby hygiene products and adult hygiene products respectively, up to 4.35 pct and -0.28 pct over the same period last year.
The comprehensive gross margin of 2023Q1 was 23.06%, an increase of 0.89pct over the previous year.
In terms of period expenses, the company's expense ratio in '22 was 7.69%, down 0.65 pct from the previous year. The sales/management/R&D/finance expense ratio was 3.47%/2.07%/3.62%/-1.47% respectively, and -0.19/+0.10/-0.08/-0.48pct respectively. Among them, the increase in the management fee rate was mainly due to the company's stock incentive plan confirming equity payments. The 2023Q1 company's expense ratio for the period was 9.01%, down 1.36 pct from the previous year. Among them, the sales/management/R&D/finance expense ratio was 4.19%/3.21%/3.68%/-2.07%, respectively, and -0.71/0.31/-0.15/-0.15/-0.81pct, respectively. Under the combined influence, the company's net interest rate in '22 was 15.40%, an increase of 0.92 pct over the previous year.
2023Q1's net interest rate was 12.56%, an increase of 1.90 pct over the previous year.
Investment advice: As an ODM leader in the nursing industry, the company has leading product development and innovation capabilities, steady expansion of production capacity, and continuous promotion of independent brands, which is expected to support long-term growth in performance.
We expect Haoyue Nursing's revenue for 2023-2025 to be 34.19, 41.00 and 4.885 billion yuan, an increase of 22.02%, 19.93%, and 19.13% over the previous year; the net profit of the mother was 530, 635, 751 million yuan, up 25.23%, 19.92%, 18.28% over the previous year. The corresponding PE was 14.9, 12.4x, and 10.5x, maintaining the investment rating of Buy-A.
Risk warning: risk of category and channel development falling short of expectations; risk of fluctuations in raw material prices; risk of increased industry competition, etc.