The company released the 2023 annual report and the 2014 quarterly report
24Q1 revenue of 115 million yuan, an increase of 9.7%; net profit attributable to mother was 0.23 million yuan, an increase of 35.5%; after deducting non-return to mother, an increase of 32.5%;
23Q4 revenue was 127 million yuan, up 27.8%; net profit due to mother was 257 million yuan, up 2326.9%; after deducting non-return to mother, the same decrease of 7.1%;
23A's revenue was 462 million yuan, up 10.9%; net profit attributable to mother was 314 million yuan, up 245.7%; deducted from non-return mother 66 million yuan, a decrease of 25.8%.
The increase in revenue in '23 was mainly due to the company actively increasing investment in R&D, expanding product categories, expanding sales channels, and increasing sales revenue; the sharp increase in net profit to the mother was mainly due to confirmed revenue from the company's eviction compensation payments. The reduction in non-return deductions was mainly due to the fact that fund-raising projects had not yet been put into operation in the first half of '22, and depreciation of fixed assets was low. With the project put into operation, depreciation expenses increased dramatically in 2023. At the same time, sales revenue increased in 23, and wages, remuneration, office expenses, etc. all increased by varying degrees compared to the previous period, which ultimately led to a decrease in the company's deductions from non-return payments compared to '22.
In 2023, the company plans to pay a total cash dividend of 45 million yuan (tax included), with a cash dividend ratio of 14.37%.
By category, upholstery fabric was 452 million yuan, up 19.8%; gross profit margin was 35.3%, or 1.4 pct; sofa cover revenue was 5.65 million yuan, down 83.1%; gross profit margin was 20.9%, up 2.1 pct; other revenue was 1.93 million yuan, down 10.4%.
By region, China's revenue was 83 million yuan, up 53.9%; the gross profit margin was 40.3%, up 0.8 pct; the US revenue was 151 million yuan, down 12.2%, and the gross profit margin was 39.3%, up 5.3 pct; Vietnam's revenue was 193 million yuan, up 22.1%, gross profit margin 27.8%, or 5.3 pct; other countries and regions had revenue of 0.3 million yuan, up 13.3%, gross profit margin of 44.6%, same increase of 1.5 pct.
The gross profit margin for 23 was 35.1%, an increase of 0.1 pct; the net profit margin was 67.9%, with a total annual rate of 46.1pct23 of 17.4%, and an increase of 7.2 pct. Among them, the sales rate was 5%, an increase of 1.1 pct, mainly due to the company's increased investment in labor costs to develop new markets; the management rate was 11%, which increased 3.6 pct, mainly due to depreciation and operating expenses of equipment and facilities added due to the commissioning of fund-raising projects; -4.2%, an increase of 1.6 pct, mainly due to the combined effects of increased interest income and reduced exchange income; and the R&D rate of 5.6%, an increase of 1 pct, mainly due to the introduction of high-end design talents and increased investment in R&D to develop new categories.
Continuously improve product design and development capabilities, keep up with market trends, the company will continue to focus on cultivating fashion acuity and continuously improve the core competitiveness of product design and development. For example, every year, the company sends relevant design and development personnel to participate in relevant domestic and foreign fabric exhibitions and furniture exhibitions to understand the latest market trends and needs, and learn new ideas, new materials and new processes for foreign product design. The company will also launch fabrics that match the style of its furniture products to customers through regular research on the local furniture market in the US and judging industry trends.
In addition, the company also pays great attention to research in the field of material and yarn development, production and processing technology, involving the development and use of new materials, new technology, and new equipment, so that fabric products have higher technological content and added value.
The subsidiary Waltz Vietnam officially began construction to accelerate the company's global industrial layout according to the company's business development needs. In order to continue to advance the company's overall development strategy and further enhance the company's core competitiveness, Waltz Textiles' construction project with an annual output of 10 million meters of high-grade functional fabrics was officially started in August 2023 after about half a year of preliminary preparation. In order to accelerate the company's global industrial layout and enhance the company's overall competitiveness, the company established Waltz Vietnam Co., Ltd. in Quang Ngai, Vietnam in December 2023. It plans to invest 25 million US dollars to build a new “Waltz Vietnam 8-million-meter high-grade functional fabric construction project”. The project uses a project implementation model where the production line is first leased to build a new plant, and the production line is moved to the new plant after the plant is completed. The aim is to rapidly promote the commissioning of Vietnamese production capacity to meet customer needs.
Deeply cultivate the US market and accelerate the pace of global layout
Currently, the company's main products, decorative fabrics, are mainly sold to the US. In the future, the company will continue to deeply cultivate the US market and increase development efforts for high-value-added customers on the basis of maintaining existing well-known customers such as Ashley and La-z-Boy. Further expand sales in Europe, Mexico, the Middle East and domestic markets to meet the needs of consumers in these regions.
Adjust profit forecasts to maintain “buy” ratings
The company's main business is R&D, design, production and sales of high-end decorative fabrics and products. The main products are decorative fabrics and sofa covers. Currently, the products are mainly used in sofas, seats, pillows, etc., and are mainly sold to the United States. The company owns various brands such as “Z-Wovens,” “SunBelievable,” “NeverFear,” “Z-free,” and “Z-cycle,” and its main customers include internationally renowned furniture manufacturers such as Ashley, LA-Z-Boy, Roomstogo, Bob's, Jackson, H.M. Richards, and Gujia Home Furnishing.
The company may benefit from the globalization of production capacity layout and the globalization of market sales in the long term. Considering that in the short term, the company is in the phase of capacity expansion and increasingly fierce competition in the domestic and foreign fabric markets, we adjusted the profit forecast. The company's net profit for 24-26 years is 0.91/1.03/118 million yuan (the previous value was 1.10/126 million yuan 24-25 years ago), EPS is 0.83/0.94/1.07 yuan/share, respectively, and the corresponding PE is 21/18/16X, respectively.
Risk warning: new product development risk; risk of declining global purchasing power; exchange rate risk; risk of raw material price fluctuations, etc.