The company released financial reports for 23A and 24Q1
24Q1 revenue of 2.4 billion yuan increased 39%; net profit of 100 million yuan increased by 34%; 23A revenue of 8.2 billion yuan increased by 26%, net profit attributable to mother decreased by 27%, net profit of 260 million yuan decreased by 27%, and after deducting non-return of 230 million yuan decreased by 27%; of these, 23Q4 revenue also increased 28%, net profit attributable to mother 100 million; withheld from non-mother 100 million.
In 2023, the company's credit impairment loss of 120 million was mainly due to an increase in accounts receivable due to an increase in bad debt losses and an increase in impairment losses in receivables financing; an asset impairment loss of 160 million yuan was mainly due to Dr. Chef's goodwill impairment calculation.
By project, the company's office furniture revenue in '23 was 3.5 billion, up 4%; gross profit margin was 23.4%, up 2pct; soft home revenue was 1.3 billion, up 3%, gross profit margin 27.2%, and 6.5 pct; panel home revenue was 1.1 billion, down 18%, gross profit margin 18.8%, 4.6pct; new material flooring revenue was 1.5 billion, up 557%, gross profit margin 20%, same decrease 7pct.
By brand, LO revenue in '23 was 1.1 billion, an increase of 28%; gross profit margin of 31% increased by 0.8 pct; Dr. Chef's 660 million decreased by 27%, gross profit margin of 24%, same decrease of 2 pcts; e-commerce revenue of 1.6 billion yuan, same increase of 61%, gross profit margin of 28.4%, same increase of 3.3 pct.
E-commerce actively embraces multiple platforms to achieve high revenue growth.
The company has built a complete and high-quality supply chain system, continuously deepened the global layout and brand strategy, and integrated resources into cross-border e-commerce businesses with high growth potential. Cross-border e-commerce sales channels cover US online retail platforms such as Amazon, Wayfair, and Walmart, as well as major domestic overseas e-commerce platforms such as TikTok and TEMU. The company has set up 5 warehousing and distribution centers in North America, covering the company's cross-border e-commerce terminal consumer product distribution scope. The company won the 2023 TBI (Top Brand Innovation Awards) Best Overseas Brand for its outstanding multinational business performance and global strategic layout.
The cross-border e-commerce sector uses powerful content marketing algorithms on the TikTok platform, combined with the team to design product application scenarios, and use the influence of internet talent audiences and fans to more intuitively reach end consumers. According to Hugo's cross-border data, the e-commerce sector achieved the number one sales volume in the home category on the Tiktok platform in 2023.
Develop customers in manufacturing, go overseas, and realize the value of the entire supply chain
Actively expand the new market layout and actively develop new customers with marketing. While the manufacturing business (OEM/ODM) is deeply involved in the European and American markets, active marketing is carried out through the formation of a new marketing team with R&D and design capabilities to provide customers with full-solution product design, actively participate in domestic and foreign furniture exhibitions, enhance localization service capabilities, successfully extend the market to the Middle East, South America and other regions, and further enrich the company's products and market structure. For example, the company and Emirati company Mass signed a cooperation agreement to further cultivate the UAE home furnishing market. In 2023, the company's manufacturing business (OEM/ODM) revenue was 4.82 billion, up 29.1% from the same period.
Update profit forecasts and maintain “buy” ratings
At present, the development of the industry mainly shows the gradual integration of boundaries between office and civil furniture categories, and products are showing the development trend of systematization, intelligence, digitalization, lean and environmental protection.
The company has a high-quality core management team and a specialized core technical team, optimizing R&D management mechanisms and incentive mechanisms, and innovating products and services. Through continuous accumulation and accumulation, the company's competitiveness has been consolidated and strengthened: a global sales network and rich product matrix; a strong R&D technology platform and core technical team; an efficient and collaborative global production base and comprehensive operation capabilities.
We estimate that the company's net profit for 24-26 will be 550 million/670 million/82 million, respectively, and the corresponding PE will be 12/10/8X, respectively, maintaining a “buy” rating.
Risk warning: Overseas demand recovery falls short of expectations; new cross-border e-commerce platforms are resistant to promotion; risk of declining core customer share, etc.