The company released its annual report for the year 23 and the financial report for 24Q1. The company achieved revenue of 4.840 billion yuan in '23, an increase of 12.39% over the previous year, and net profit to mother of 563 million yuan, an increase of 68.80% over the previous year. 23Q4 achieved revenue of 1,332 billion yuan, a year-on-year increase of 13.87%, and realized net profit to mother of 161 million yuan, an increase of 41.11% over the previous year. 24Q1 achieved revenue of 1,237 billion yuan, a year-on-year increase of 14.61%, and realized net profit of 125 million yuan to mother, an increase of 37.38% over the previous year. The company announced a dividend of 5 yuan for every 10 shares for 23 years, with a dividend rate of 50%.
The rapid growth of smart home entry is driving the steady growth of smart home products. The company's smart home products achieved revenue of 3,960 billion yuan in 2023, an increase of 10.09% over the previous year. Among them, smart camera revenue increased 3%, smart household revenue increased 49%, and the revenue share of smart home products increased to 13%.
The share of IoT cloud platform business has further increased. The company's IoT cloud platform achieved revenue of 856 million yuan, an increase of 27.79% over the previous year, and the share of cloud platform revenue increased to 17.69%, of which C-side value-added service revenue was 432 million yuan, and B-side developer customer service revenue was 424 million yuan.
The increase in the share of high-gross margin IoT cloud platform business is driving the company's profitability higher. Looking at 2023, the gross margin of the company's smart home products increased by 6.02pp to 35.86% year on year, the gross margin of the IoT cloud platform business increased by 3.66pp to 76.09% year on year, the increase in the share of cloud platform business led the company's overall gross margin to increase 6.44pp to 42.85%, and the sales/management/R&D expense ratio changed by 1.80pp/-0.09pp/1.10pp to 14.40%/3.33%/15.10%, respectively. The net profit margin of the company increased by 3.90pp to the previous year At 11.63%, the 24Q1 company's profitability continued to increase. Gross margin increased 1.60pp to 42.72% year over year, and net profit margin to mother increased 1.68pp to 10.13% year over year.
Investment advice. The company continues to focus on its core strengths, continues to develop smart home products and IoT cloud platform services, and lean supply chain management continues to reduce costs and increase efficiency. We expect the company to achieve net profit of 718 million yuan, 901 million yuan, and 1,101 billion yuan in 2024-2026. Referring to comparable companies, the company will be given a PE valuation of 38 times in 24 years, corresponding to a target price of 4.864 yuan, giving it a “superior to the market” rating.
Risk warning. Demand for terminals fell short of expectations, and terminal competition intensified.