Description of the event
The company disclosed its quarterly report: In 2024Q1, the company achieved revenue of 127 million yuan, a year-on-year decrease of 44.49%, and realized net profit of 4.53 million yuan, a year-on-year decrease of 88.88%. After deducting losses of 990,000 yuan, a year-on-year decrease of 102.58%.
Incident comments
External demand has declined, and the company's operating performance stage is under pressure. 2024Q1's revenue fell 44.49% year on year, or was mainly due to the continued downturn in the real estate sector, leading to weak overall demand in the integrated stove industry. According to Aowei Cloud Network summary data, retail sales volume of the 2024Q1 integrated stove fell further by 31.4% on a small basis in the same period last year, retail sales volume in the offline market decreased 35.2% year on year, retail sales volume in the offline market increased 31.95% year on year, and retail sales increased 40.15% year on year, but due to the large size of the online market, retail sales volume of integrated stoves fell sharply by 28.1% year on year in 2024Q1. Retail sales fell sharply by 30.3% year over year. 2024Q1's gross margin decreased by 4.85pct year-on-year, probably due to a decline in sales scale and an increase in upstream raw material prices. In terms of cost ratio, the company's sales expense ratio increased by 9.94 pct year on year, or mainly because the company continued to strengthen e-commerce channels, broaden home improvement, KA channels, and add sinking channel outlets. The management fee rate increased 4.19 pct year over year, and the R&D cost rate increased 1.75 pct year over year. In addition, credit impairment losses increased sharply by 3.92 million yuan year on year, mainly due to preparations for inventory price reduction. Combined, the 2024Q1 company's operating profit (gross profit amount - tax and additional - sales & management & R&D expenses + credit & asset impairment loss) was -14.835 million Yuan, a sharp decrease of 103.67% year on year. On this basis, the company's financial expenses ratio increased by 0.4 pct year on year, which ultimately reduced the company's 2024Q1 net profit margin by 14.25 pcts year on year to 3.57% year on year. Also, due to the 155.49% increase in government subsidies received by the company during the reporting period, the net profit margin without deduction fell 17.51 pct to -0.78% year on year. The net cash flow from 2024Q1's operating activities fell sharply by 98.84% year on year, mainly due to a decrease in cash received from sales products, and the corresponding company's accounts receivable turnover days increased by 194.95% to 62.5 days year on year.
It has been deeply involved in the field of kitchen appliances all year round, and is in the first tier of the integrated stove industry with R&D and channel advantages. The company is a modern kitchen appliance manufacturer. It has always examined the consumption upgrade needs of the times and the actual pain points of the kitchen with a higher dimensional concept, dug deep into the diverse applications of integrated technology and kitchen scenarios, and achieved innovative technological iterative upgrades of “smoke-free”, “harmless”, and “unmanned” kitchens.
After years of development, the company has formed a strong integrated stove R&D system, a complete product production line and a wide-ranging multi-channel sales network. The Yitian brand has become one of the integrated stove brands loved by consumers, ranking in the first tier of the integrated stove industry in China. According to Aowei Cloud Network's summary data, the 2024Q1 Yitian brand's cumulative online retail sales share is 9.0%, and the cumulative offline retail share is 11.7%. Furthermore, the company continues to promote technological innovation and transformation of achievements, promote product iteration, accelerate product quality upgrades and performance improvements, and build a diversified product matrix. On this basis, the company finely operates various sales channels, actively integrates resources, accelerates omni-channel collaborative development, and establishes a strategic layout of three-dimensional channels such as “KA channel+e-commerce channel+home improvement channel+engineering channel+sink channel”.
Investment advice: As an industry-leading modern kitchen appliance manufacturer, the company is committed to providing consumers with integrated kitchen appliances and integrated kitchen full-scene solutions. We are optimistic that the company will reverse the current business situation with product advantages. The company's net profit to the mother for 2024-2026 is 1.88, 2.05, and 224 million yuan, respectively, corresponding to PE of 18.24, 16.76, and 15.30 times, maintaining a “buy” rating.
Risk warning
1. The risk of falling market demand due to a slowdown in macroeconomic growth; 2. The sharp rise in raw material costs brings about a risk of declining profitability.