Event: the company released a report for the third quarter of 2023 that the company achieved operating income of 1.23 billion yuan in the first three quarters, an increase of 7.28% over the same period last year; net profit of 11.243 million yuan, down 24.55%; and non-return net profit of 10.3638 million yuan, down 22.99% from the same period last year.
The e-cigarette enterprise license has been successfully completed, and the income diversification has continued to improve. The company promoted diversified development, with operating income of 1.23 billion yuan in the first three quarters, an increase of 7.28% over the same period last year, mainly due to the gradual recovery of the company's small household appliances business and the gradual recognition of new healthy household appliances in the market. and the increase in sales of e-cigarette products after the process of quality enhancement and capacity improvement. Among them, the company's continuous distribution of e-cigarette business accumulated operating income of 60.6264 million yuan in the first three quarters, and Q3 estimated e-cigarette revenue of 43 million yuan in a single quarter, an increase of 156% over Q2. The company has successfully completed the renewal of the license of tobacco monopoly production enterprises, with full orders on hand and full potential for business development.
The category of small household appliances is expanded, and the product structure is optimized to boost the gross profit level. In recent years, the company has continuously invested in product research and development, and gradually introduced air purifiers, humidifiers, eliminate virus appliances and other new products to the market, and the product structure has been continuously optimized. On the export side, many countries around the world are facing the summer power crisis, emergency fan orders in Bangladesh, Vietnam and other regions sales growth, charging lighting sales recovery, jointly driving the growth of small household appliances business income.
In the first three quarters, the company's sales gross profit margin reached 14.04%, an increase of 1.89pct over the same period last year, of which Q3 single-quarter gross profit margin of 14.69%, an increase of 2.3pct over the same period last year, is expected to mainly benefit from the increase in the proportion of high-margin products. In the first three quarters of 2023, the company's sales / management / R & D / financial expense rates were 2.03%, 5.36%, 3.06%, 1.07%, respectively, with year-on-year changes + 1.29/+1.57/-0.31/-1.02pct. The increase in sales expense rate is expected to be mainly related to the increased promotion of new products such as e-cigarettes.
The provision of credit impairment is a drag on performance. The company signed an equity acquisition agreement in 2021 and paid a deposit for the equity acquisition in accordance with the agreement, which was later terminated due to various factors.
The company recently received an arbitration court ruling to pay a deposit for the acquisition of Yuyou equity, and to prepare for individual credit impairment according to the expected recoverable amount. This single provision will increase the company's credit impairment loss by 16.5911 million yuan in the third quarter of 2023, and reduce the net profit belonging to shareholders of the listed company by 12.4433 million yuan in the consolidated statement. After the impairment is fully calculated, the company will travel light, and the performance flexibility brought about by business growth will be better released.
Investment suggestion: the company's multi-layout continues to be optimized, and the optimization of product structure is expected to boost the gross profit margin. Taking into account the impact of credit impairment on the company's profits, we downgrade the company's homing net profit forecast for 2023-2025 to 0.40max 0.72 billion RMB 0.84 million, EPS 0.13 won 0.23 max 0.26 per share, corresponding to PE 0.26 times that of 84-46-40, maintaining the "cautious recommendation" rating.
Risk tips: e-cigarette policy risk; the risk of market competition; the risk that new business development is not as expected.