Conclusions and recommendations:
Company performance: The company released an annual report and a quarterly report for 2024. In 2023, it achieved revenue of 4.84 billion yuan, YOY +12.4%, recorded net profit of 550 million yuan to mother, and YOY +68.8%. Net profit after deduction was 550 million yuan, YOY +86.9%. The company's performance was in the middle of the performance forecast range and was in line with expectations.
Among them, Q4 achieved revenue of 1.33 billion yuan in a single quarter, YOY +13.9%, recorded net profit of 160 million yuan to mother, YOY +41.6%, net profit after deduction of 160 million yuan, and YOY +98.0%. 24Q1 achieved revenue of 1.24 billion yuan, YOY +14.6%, recorded net profit of 130 million yuan to mother, YOY +37.4%, net profit after deduction of 120 million yuan, YOY +34.9%.
Dividend plan: The company plans to pay a cash dividend of 5 yuan (tax included) for every 10 shares, with a dividend rate of about 50% and a dividend rate of about 1.1%. Furthermore, the company plans to transfer 4 shares for every 10 shares to all shareholders using capital reserves.
A low base period combined with high gross profit boosts the net profit growth rate: the company's net profit growth rate for the full year of 2023 and Q4. On the one hand, the 2022 base period was low (2022 net profit YOY -26.1%, 22Q4 net profit YOY -22.2%); on the other hand, the company's raw material costs decreased, product structure changed, and gross margin increased significantly year-on-year. In 2023, the company's comprehensive gross margin was 42.9%, up 6.5 percentage points year on year. 23Q4 gross margin was 41.3%, up 3.9 percentage points year on year. The 24Q1 revenue side continued to grow rapidly, but as the base period increased, the company's 24Q1 comprehensive gross margin increased 1.6 percentage points year-on-year, and the increase narrowed, but we are optimistic about the optimization of the company's business structure, and we expect gross margin to continue to rise.
Overseas revenue is growing rapidly, and the share of high-margin IoT revenue business has increased: Looking at domestic and foreign businesses, the company achieved revenue YOY +24.8% in 2023, faster than domestic 8.1%. Overseas business development is progressing well and continues to grow rapidly. Currently, the revenue share has increased from 28% in 2022 to 31%. In addition, judging from the business structure, smart home products achieved revenue of 3.96 billion yuan, YOY +10.1%, and gross margin increased 6.0 percentage points to 35.9% year on year, mainly due to a decrease in raw material costs; the IoT cloud platform business achieved revenue of 860 million yuan, YOY +27.8%, and gross margin also increased 3.7 percentage points to 76.1% year over year, and the revenue share increased from 15.6% in 2022 to 17.7%.
Profit forecast and investment suggestions: We expect the company's net profit to be 710,000 yuan, 860 million yuan, 1.02 billion yuan, YOY +26.2%, +21.2%, 18.6%, EPS of 1.3 yuan, 1.5 yuan, and 1.8 yuan respectively. The corresponding PE is 37 times, 30 times, and 26 times, respectively. The current valuation is also reasonable. We give “buy” investment suggestions.
Risk warning: Overseas market expansion falls short of expectations, raw material prices fluctuate