Performance review
2022 and 1Q23 results are in line with market expectations
The company announced 2022 and 1Q23 results: 1) Achieved revenue of 2,524 million yuan in '22, down 41.19% from the previous year. The mother lost 751 million yuan in net profit, and made a profit of 79 million yuan for the same period last year. After deducting non-return mother's net profit loss of 760 million yuan, profit for the same period last year was 85 million yuan; 2) 1Q23 achieved revenue of 554 million yuan, an increase of 47.89% over the previous year, and Guimu's net profit loss was 90 million yuan, a year-on-year loss of 62.94%, after deducting net profit loss of 95 million yuan, a year-on-year loss of 61.45%. The performance was in line with market expectations.
On a quarterly basis, the company's 1Q/2Q/3Q/4Q22 achieved revenue of 3.75/5.89/7.79/79/781 million yuan respectively, a year-on-year ratio of -23.35%/-54.06%/-18.12%/-50.2%, and the net profit of the mother was -2.44/-1.41/-1.08/-259 million yuan, a year-on-year difference of -10.53% /from profit to loss/-73.33% /profit to loss.
Development trends
1. 1Q23 The public decoration and fine tooling business gradually picked up, and the home improvement business was under pressure. 1) Home improvement: achieved revenue of 2,185 billion yuan in '22, -40.99% year on year, gross margin was -5.34 ppt to 27.00% year on year, 1Q23 new order contract amount was 682 million yuan, -18.69% year on year; 2) Public installation: achieved revenue of 194 million yuan in '22, -42.12% year on year, gross margin was -14.78ppt to 25.80% year on year, new orders signed in 1Q23 amounted to 32 million yuan, +58.96% year on year; 3) Finishing decoration: achieved revenue of 46 million yuan in '22, +58.96% over the same period last year; 3) Finishing decoration: achieved revenue of 046 million yuan in '22. The year-on-year ratio was -64.21%, the gross margin was -7.10ppt to 58.43% year-on-year, and the contract amount for new orders signed in 1Q23 was 13 million yuan, +6.23% year on year.
2. Gross margin is rising steadily, and attention is being paid to subsequent improvements in profitability. The company's gross margin for 1Q23 was 33.69%, +0.71 ppt over the previous year. On the cost side, the company's expense ratio for the 1Q23 period was 54.1%, compared to -67.83ppt. Among them, the sales/management+R&D/finance expenses ratio was 32.61%/19.71%/1.78%, respectively, compared to 51.77ppt/-16.15ppt/+0.09ppt. Under the overall influence, the net interest rate for 1Q23 was -16.29%, +48.73 ppt over the previous year.
3. The digital packaging business is progressing comprehensively, which is expected to empower the company's performance. By the end of '22, the company had established 23 major digital packaging stores in 19 cities across the country, and the advantages of the digital packaging business continued to be highlighted: 1) Product portfolio: The company continued to enrich the national and regional vertical product library through the development of supply chain channels. By the end of '22, there were 21,887 SKUs of digital packaging products nationwide, and the number of smart model rooms/wooden product real home case combinations reached more than 400/1200 sets, and the number of model libraries reached 17,802. We expect the rich product portfolio to fully meet market needs; 2) Operational efficiency: design aspect, digital home improvement deepening design system (DIM+) The average design time is 2.5 hours, which is 80% shorter than the previous design plan deepening cycle. In terms of delivery, the system can control the timeliness of each node, and the closed-loop timeline/project acceptance rate of engineering nodes increased by 27%/8%. We expect the continued deepening of the digital packaging business to help the company's long-term development.
Profit forecasting and valuation
Considering that the company's new orders have resumed rapid growth, we raised the 2023 net profit forecast by 25% to 129 million yuan, and introduced the 2024 net profit forecast of 173 million yuan. The current stock price corresponds to the 2023/2024 25/18 P/E, maintaining the industry rating. Considering the recovery in consumption, the company's subsequent orders rose rapidly, raising the target price by 42% to 8.5 yuan, corresponding to P/E in 2023/2024 27/21 times, respectively, with room for 11% upward.
risks
The decline in real estate sentiment exceeded expectations, and competition in the industry intensified.