The company publishes an annual report for '23 and a quarterly report for '24. 1) The 23-year performance was in line with expectations. It achieved revenue of 17.51 billion yuan, an increase of 22.9% over the previous year, and net profit of 16.1 billion yuan, an increase of 41.2%. The performance was in line with expectations. The high growth mainly benefited from rapid business expansion, impressive sales performance of new products, falling freight rates, and exchange rate improvements. In the 23Q4 single quarter, the company's revenue increased 21.4% to 5.72 billion yuan, net profit to mother increased 28.3% year over year to 40 billion yuan, and net profit after deducting non-return to mother increased 70.3% year over year to 420 million yuan. 2) 24Q1 continued the high growth trend. Revenue increased 30.1% year over year to 4.38 billion yuan, net profit due to year-on-year increase of 1.6% to 310 million yuan, and net profit after deduction surged 29.0% year on year to 320 million yuan. The performance exceeded expectations, mainly due to the company's new product launch and channel expansion, driving a rapid increase in business volume. The company's non-net profit grew faster, mainly due to changes in the fair value of participating companies and one-time losses due to fluctuations in foreign exchange contracts. 3) High dividends focus on shareholder returns. The company plans to pay a cash dividend of 20 yuan (tax included) for every 10 shares, with a dividend rate of 50%. At the same time, it will increase shareholders' returns by transferring 3 shares for every 10 shares of capital reserve.
The company's three major businesses all grew rapidly in '23, and the new product matrix continued to be laid out in 24Q1. 1) Revenue from charging and energy storage products increased rapidly. Revenue of 8.604 billion yuan was achieved in '23, up 25.1% year on year, accounting for 49.1% of total revenue, and gross margin increased 0.4 pct to 42.3% year on year. In '23, the company launched Anker SOLIX, a consumer-grade new energy brand series to provide green energy solutions for home and outdoor scenarios. In January '24, it launched a total of 6 products in the ultra-fast magnetic wireless charging series to promote the intelligence and flexibility of charging methods. 2) Intelligent innovative products are growing rapidly, and gross margin has increased dramatically. Revenue in '23 was 4.54 billion yuan, up 18.7% year on year, accounting for 25.9% of total revenue, and gross margin increased 9.7 pct year on year to 46.5%.
In 23, a dual camera doorbell and a variety of dual-camera gimbal cameras were launched. In the field of smart cleaning, the eufy X10 Pro Omni all-purpose base station sweeper was sold in 24, integrating floor sweeping, mopping, and all-purpose base stations, further enriching the high-end series production line. 3) The revenue and gross margin of smart video products were impressive. Revenue in '23 was 4.29 billion yuan, up 26.5% year on year, accounting for 24.5% of revenue, and gross margin increased 7.8 pct year on year to 43.5%. Actively launch new products such as the C30i ear-clip headphones and the Boom 2 outdoor portable Bluetooth speaker to enrich the product layout. The increase in gross margin of intelligent innovation and smart video is expected to be related to optimizing product structure and supply chain procurement, and will benefit from product innovation, etc.
Online growth is faster than offline, and independent stations are growing at an impressive rate. 1) Online revenue accounts for 70%, and channels are diversified. Online revenue increased 30% year-on-year to 12.3 billion yuan in '23, and the share of revenue increased by 4pct to 70%. Among them, Amazon's revenue increased 25% year on year to 10 billion yuan, accounting for 1.2 pct to 57% of total revenue. Third-party platforms other than Amazon achieved revenue of 1.07 billion yuan, an increase of 32.8% year on year, and the share of revenue increased 0.5 pct to 6%. The revenue of the six major independent stations was 1.24 billion yuan, an increase of 83.9% over the previous year, and the revenue share increased 2.4 pct to 7%. 2) Steady development of offline channels.
In '23, the company's offline revenue increased 8.4% year-on-year to 520 million yuan, and the share of revenue decreased by 4pct to 30%. At present, the company has entered well-known supermarket chains such as Walmart, Best Buy, and Target in North America, as well as 7-11 convenience stores in Japan, and continues to expand its offline channels in Europe, Australia, Southeast Asia, etc.
Gross margin continues to improve, and emphasis is placed on brand building and R&D investment. Gross margin increased 4.8pct to 43.5% year-on-year in '23, mainly driven by product structure and supply chain optimization, cost reduction and efficiency, and depreciation of the RMB exchange rate. Investment in R&D and marketing also increased. The sales expense ratio increased by 1.6 pct to 22.2% year on year, and the management expense ratio (including R&D) was 11.4%, up 0.6 pct year on year. Among them, the R&D cost ratio increased 0.5 pct to 8.1%, and the net income margin increased 1.2 pct to 9.2% year on year. 24Q1 gross margin was further improved to 45.1%, sales expenses increased by 1.3 pct to 22% year on year, management expenses (including R&D) rate increased by 1.2 pct to 13%, and net income interest rate decreased by 2 pct to 7.1%. Mainly due to losses due to changes in fair value of participating investment companies and invalid foreign exchange hedging, net interest rate after deducting non-return mother's net interest rate remained flat at 7.3% year on year.
Inventory turnover efficiency has been accelerated, and cash flow has improved significantly. At the end of 23, the company's inventory was 2.41 billion yuan, up 63% from the end of '22. Mainly due to increased demand for inventory preparation due to increased business volume, the number of inventory turnover days dropped by 3 to 99 days.
Inventory at the end of 24Q1 was 2.65 billion yuan. Net cash flow from operating activities in '23 was $1.43 billion, up 0.4% year on year. Cash and cash equivalents at the end of the period were $1.79 billion, a sharp increase of 93%, and rose to $1.81 billion in 24Q1.
Anke Innovation is a well-known global consumer electronics brand. With product strength as the core, technical barriers and product advantages continue to be strengthened to maintain a “buy” rating. The company attaches importance to investment in R&D, and reuses existing technical advantages to new fields to help it develop new categories. At the same time, the development of offline channels and emerging markets is increasing, and future growth prospects can be expected.
Maintaining 24-25 and adding a 26-year profit forecast, the net profit for 24-26 is estimated to be 19.1/22.3/2.60 billion yuan, respectively, corresponding PE is 18/15/13 times, maintaining the “buy” rating.
Risk warning: risk of changes in online platform rules; increased risk of industry competition; risk of new product promotion falling short of expectations.