Description of the event
The company disclosed the 2023 annual report & 2024 quarterly report: The company achieved revenue of 1,275 million yuan in 2023, a year-on-year increase of 42.30%, and achieved net profit attributable to mother of -0.51 million yuan, a loss of 73 million yuan compared to the 2022 adjusted data, a net profit of -56 million yuan, a loss of 74 million yuan compared to the 2022 adjusted data; in Q1 2024, it achieved revenue of 293 million yuan, an increase of 28.59% over the previous year. Net profit to mother was 0.16 million yuan, net profit after deducting non-return to mother of 0.16 million yuan to reverse losses.
Incident comments
New products effectively help expand superposition channels, and achieve impressive revenue growth under a lower base. The company's revenue in 2023 was +42.30% year-on-year. Considering the lower base in 2022, the two-year revenue compound growth rate reached 3.52%. By product, eye, neck, scalp+head, shoulder and lower back products achieved revenue of 1.92/1.75/1.66/4.83/109 million yuan, a year-on-year change of -0.04%/-26.88%/+49.30%/+438.85%/+30.95%, eye, neck, scalp+head, and shoulder sales, respectively. %/ +49.22%/+143.42%. The company's new products brought strong growth momentum. In 2023, the company's new product revenue accounted for 58.9% of revenue. For example, the Neck N5 Mini shoulder and neck massager broke through the Douyin channel, and radiation led to an increase in the company's traditional online channels and offline store traffic. By sales model, the company's online channel sales revenue was +46.70%, of which online direct sales, online distribution, and e-commerce platform warehousing were +67.50%/+19.00% +16.22%, respectively. The impressive increase in online direct sales was mainly due to sales growth on the Douyin platform. The company's online channel had formed an initial parallel pattern of three horse-drawn carriages; offline channel sales revenue was +41.15%. Among them, offline direct sales and offline distribution increased by +31.95%/+68.74%. Sam channel ; ODM revenue was -26.27% year-on-year, mainly due to a decline in sales from major overseas customers. In terms of number of stores, the number of offline direct sales stores reached 143 at the end of 2023 (down 20 from the end of 2022), and the number of offline distribution stores reached 44 (14 more than at the end of 2022). 2024Q1's revenue was +28.59% year-on-year. Considering base issues, the two-year compound growth rate reached 8.81%, maintaining continuous growth in scale.
Profits have improved, and losses have been reduced significantly in 2023, and 2024Q1 has reversed losses. The company's gross margin reached 59.32% in 2023, +9.50pct year over year, or due to factors such as the company's increased share of new product sales, channel structure optimization, and supply-chain cost reduction and efficiency; by product, the gross margins of eye, neck, scalp+head, shoulder and lower back products increased by 3.84/12.30/1.78/22.15/6.66 pct respectively; by sales model, online direct sales, e-commerce platform warehousing, offline direct sales, offline distribution and ODM gross margin increased 8.71/6.21/6.21/ 12.50/6.33/4.33pct
On the cost side, the company's sales, management, R&D and financial rates in 2023 were +0.10/-0.68/-1.81/+0.28pct, respectively; the company's net profit to mother in 2023 decreased by 73 million yuan year on year, and the net profit margin to mother reached -3.99%, +18.04pct year on year.
The gross margin of 2024Q1 reached 62.78%, +3.73pct year on year. Sales, management, R&D and financial rates were -2.31/+1.53/-0.23/ -0.92pct respectively, and the net profit margin to mother reached 5.35%, reversing the loss.
Investment advice: The company is deeply involved in smart portable massagers and has formed a strong brand awareness. On this basis, the company actively launches new products and optimizes channel strategies, and is expected to achieve new high-quality development. The company's net profit for 2024-2026 is expected to be 0.91, 1.21, and 156 million yuan respectively, maintaining a “buy” rating.
Risk warning
1. Macroeconomic fluctuations bring about the risk of falling demand;
2. Increased competition brings the risk of reduced profit efficiency.