The company's revenue in 2023 was $3.68 billion (+27.9%) and net profit of $420 million (+33.4%).
Among them, revenue in Asia, led by the Chinese region, increased rapidly, and core brands, led by Tumi, continued to grow.
The company's product and regional revenue structure improved, while the expense ratio control effect was good, and the profit margin increased significantly. The company's annual gross margin/adjusted EBITDA profit margin increased to 59.3%/19.3%. The company's net profit scale from 2024 to 2026 is estimated to be US$476 million, US$527 million, and US$575 million, respectively, with year-on-year growth rates of 14%, 11%, and 9%, respectively, corresponding to 24PE12X, 25PE11X, and 26PE10X, maintaining the “Highly Recommended” rating.
The company's revenue and profit increased well in 2023. In 2023, the company achieved revenue of US$3.68 billion, +27.9% YoY; realized net profit of US$420 million, +33.4% YoY. Single 23Q4 achieved revenue of US$950 million, +16.2% YoY; realized net profit of US$150 million, or -24.8% YoY. The revenue side for the whole year was in line with the forecast, and the profit side slightly exceeded expectations due to continuous improvement in product structure and good cost control effects.
China continues to recover, revenue increases in Asia, and core brands continue to grow:
(1) By region: China's recovery is driving high growth in Asia, while Europe and North America have returned to normal and steady growth.
Sales in Asia/North America/Europe/Latin America were +56%/+13%/+15%/+24% year-on-year for the full year of 2023, and Europe and North America returned to normal growth. The Asian region mainly benefits from the continued recovery of travel in mainland China, while the increase in international travel is driving rapid growth in regions such as Japan and South Korea. Specifically, mainland China +79%, Japan +56%, South Korea +49%, Hong Kong, China +96%, and Singapore +105%. India's +19% also tend to normalize growth after a period of rapid growth.
(2) By brand: The three major brands go hand in hand, and Tumi continues to lead the growth. Net sales of Samsonite/Tumi/American travel brands in 2023 were +28%/+34%/+26%, respectively. ① Tumi's performance in Asia/North America/Europe/Latin America was +62%/+22%/+32%/+88%, respectively; ② Samsonite was +65%/+11%/+18%/+20% in Asia/North America/Europe/Latin America; ③ American travel in Asia/North America/Europe/Latin America was +52%/-8.4%/-0.2%/+28%, respectively.
(3) By sales channel: DTC channel growth rate is higher than wholesale. Net sales of wholesale/DTC channels increased 25%/32% year over year in 2023, respectively. Offline retail/e-commerce increased 32%/32% year-on-year respectively in DTC channels. Benefiting from offline store updates and advertising, the DTC channel's growth rate was higher than that of wholesale.
There was a net increase of 67 retail stores throughout the year, including 44 in Asia.
(4) By product category: Net sales of travel/non-travel categories increased by 29%/28% year-on-year respectively in 2023.
The high-margin brand Tumi and the Asian region increased their share of revenue. Although advertising expenses increased, the control effect of fixed SG&A expenses was remarkable, and the company's profit margin continued to rise. In 2023, the company's overall gross margin was +3.5pct year-on-year to 59.3%. It is expected that the share of net sales in Asia and DTC channels, which are still the Tumi brand and has high gross margins, will increase. In terms of cost rates, the company continues to control fixed SG&A expenses, which were 1.4 pct to 22.7% year on year in 2023; marketing and advertising continued to be strengthened to reach potential consumers and enhance brand power in multiple regions. The proportion of advertising expenses in 2023 was +1.2 pct to 6.6% year over year. Under comprehensive cost control, the company's adjusted EBITDA profit margin in 2023 was +2.9pct year-on-year to 19.3%.
Cash flow from operating activities is sufficient, leverage ratio is declining, and capital structure continues to improve. As of the end of 2023, the company's net cash flow from operating activities was US$530 million, +92% YoY, with sufficient cash flow. The company's equity multiplier in 2023 was 3.37, a further decrease from 2022 (4.37). Since 2020, the leverage ratio has declined year by year, and the capital structure has continued to improve.
Profit forecast and investment rating: The company is a global luggage leader. The brand matrix and multi-regional comprehensive layout continue to be strengthened, and diversified promotion continues to expand the global influence of core brands. Against the backdrop of continued growth in global travel demand, it is expected that the company will still benefit from the growth of the three core brands and the Asian region. At the same time, as the product structure improves and costs are maintained, the company's profit margin is expected to increase steadily.
The company's net profit scale from 2024 to 2026 is estimated to be US$476 million, US$527 million, and US$575 million, respectively, with year-on-year growth rates of 14%, 11%, and 9%, respectively, corresponding to 24PE12X, 25PE11X, and 26PE10X, maintaining the “Highly Recommended” rating.
Risk warning: Downstream demand and product sales fall short of expectations. Increased market competition has led to declining brand share, declining profit margins, risk of exchange rate fluctuations, systemic risk of Hong Kong stocks, etc.