The company released its 2023 annual report and 2024 quarterly report
24Q1 revenue of 860 million, +23.0% year on year; net profit of 42.69 million year on year; net profit without return to mother of 42.81 million, +21.6% year on year; gross profit margin 22.1%, -0.3 pct year on year; net profit margin 5.2%, -2.3 pct year on year.
The same decline in profits was mainly due to strategic investment in building independent brands, and related marketing expenses and sales and operating expenses increased rapidly.
23Q4 revenue was $1.04 billion, +19.7% year on year; net profit attributable to mother was 86.69 million, +72.4% year on year; net profit after deduction of non-return to mother was 14 million, -72.0% year over year; non-recurring profit and loss was mainly due to Q4's non-policy relocation and disposal revenue of about 90 million yuan.
Revenue of $3.54 billion in '23, -12.8%; net profit to mother of $30 billion, -11.1% year on year; net profit after deducting non-return to mother of 210 million, -13.8% year on year; gross profit margin 22.9%, +3.6 pct year on year; net profit margin 8.6%, year on year +0.3 pct year on year.
It is proposed to distribute 130 million dollars in 23, with a dividend ratio of 44.5%; in addition, it is proposed to formulate a profit distribution plan for the mid-year 24, with a dividend ratio of no more than 50%.
By category, office chair revenue in '23 was 2.56 billion, -7.9%; gross profit margin of 25.3%, +4.1pct; sofa revenue was 54.4%; gross profit margin of 15.5%, +1.5pct; massage chair revenue was 240 million, -32.2%; gross profit margin of 14.9%, -0.9pct; leisure chair revenue was 0.3 billion, -18.0% year on year; gross profit margin of 30.2%, YoY +4.0pct.
Subregions: 890 million domestic, +7.9% year on year; gross profit margin 23.0%, +2.6 pct year on year; overseas 2.64 billion, -17.9% year on year; gross profit margin 22.8%, +3.8 pct year on year.
The company is deeply involved in the basic export market, and new and old customers continue to expand
Continued interest rate hikes in major European and American economies in 23 intensified the contraction in demand in the terminal market, and the momentum for trade growth weakened. The company took more measures to strengthen marketing for new and old customers in an effort to overcome the adverse effects of the short-term decline in market demand.
The company adheres to the “number one by one” market strategy, “going out” frequently to participate in exhibitions, visit customers, recommend new products, and accelerate the acquisition and transformation of business opportunities; formed a mature overseas sales team to give full play to the comprehensive advantages of R&D, manufacturing, overseas bases, etc., and successfully developed many important channels and major customers such as Costco and Sam's. Key major customers have achieved shipments one after another, laying a solid foundation for subsequent business growth.
Furthermore, the company is actively developing cross-border e-commerce business, focusing on building core competitiveness around products, supply chains, operations, etc., continuously optimizing costs and expenses, improving operating performance, and continuously improving business scale and profitability.
Global production capacity layout ensures supply chain security
The Romanian base was successfully put into operation in '23, forming new business growth; the Vietnamese base continued to promote capacity expansion, lean production, inventory optimization, efficiency improvement, and localized supply chain and management team building to further optimize costs, improve operating levels, and successfully enter multiple new categories, new customers, and new businesses; in '23, the company decided to invest in the construction of the third phase of the Vietnamese production base. Up to now, it has completed land purchase, and is advancing work related to plant construction according to plan.
Accelerate the construction of domestic sales and independent brands, and take multiple online+offline measures
The company takes “support” as a value anchor and is committed to increasing domestic brand business revenue and brand awareness.
In '23, the online omni-channel GMV of the “Double Eleven” self-branded lumbar chair product increased 256% year over year, rising to second, third, and second place respectively among similar products on Tmall, JD, and Douyin platforms.
At the same time, we will accelerate the layout of offline independent channels, launch the “100 Cities Attack” market coverage plan and the “Lighthouse Benchmarking Plan”, further increase the number of engineering channel customers and major direct management customers; accelerate the construction of offline retail channels, enter many large well-known supermarkets with independent brands, and further open up sales channels for brand products to help sales growth and brand communication.
Adjust profit forecasts to maintain “gain” rating
The company adheres to the “one of the best” market strategy, and the influence of domestic brands continues to expand. According to the 23 annual report, we adjusted the profit forecast. The company's net profit for 24-26 is 3.3/4.2/50 billion (24-25 years ago, respectively), and PE is 12X/9X/8X, respectively.
Risk warning: The recovery in overseas demand falls short of expectations, investment in independent brands continues to increase, overseas production capacity falls short of expectations, trade frictions, etc.