UE(SH:603600) Soochow Securities·2024-04-25 16:00Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected stock price increase of over 15% relative to the benchmark in the next six months [4]. Core Insights - The company reported a revenue of 3.54 billion yuan for 2023, a year-on-year decrease of 12.8%, and a net profit attributable to shareholders of 300 million yuan, down 11.1% year-on-year. The performance was in line with expectations [1]. - The decline in revenue was attributed to inventory destocking in European and American markets, while gross margin improved significantly, increasing by 3.5 percentage points to 22.9% due to factors such as the depreciation of the RMB against the USD and lower raw material and shipping costs [1]. - The company’s sales expenses increased significantly due to strategic investments in building its own brand, with a sales expense ratio of 7.4%, up 3.8 percentage points year-on-year [1]. - The company’s self-owned brand revenue reached 710 million yuan in 2023, a year-on-year increase of 66.6%, with significant growth in online sales channels [1]. Summary by Sections Financial Performance - In 2023, the company achieved revenues of 3.54 billion yuan, with a breakdown of product revenues: office chairs (2.56 billion yuan), sofas (540 million yuan), massage chairs (240 million yuan), and leisure chairs (30 million yuan), reflecting year-on-year changes of -7.9%, -34.4%, -32.2%, and -18.0% respectively [1]. - Domestic revenue was 890 million yuan, up 7.9% year-on-year, while overseas revenue was 2.64 billion yuan, down 17.9% year-on-year [1]. - The company’s gross margin improved to 22.9%, driven by favorable currency exchange rates and reduced costs [1]. Market Outlook - The report indicates a gradual recovery in overseas demand, with a 30% year-on-year increase in office chair exports from China by December 2023. The company expects overseas orders to return to a growth trajectory in 2024 [1]. - The company is expanding its overseas manufacturing capabilities, with production in Vietnam and Romania, which supports its market penetration efforts [1]. Brand Development - The company is accelerating its brand development, achieving a 256% year-on-year increase in online sales during the Double Eleven shopping festival, with significant improvements in rankings on major e-commerce platforms [1]. - Offline, the company is expanding its presence through initiatives like "Hundred Cities Offensive" and "Lighthouse Benchmark Plan," increasing its customer base in major supermarkets and direct clients [1]. Profit Forecast - The company’s net profit forecasts for 2024 and 2025 are maintained at 360 million yuan and 430 million yuan respectively, with an expected net profit of 500 million yuan in 2026. Corresponding EPS estimates are 1.09, 1.29, and 1.50 yuan, with PE ratios of 11.8, 10.0, and 8.6 times [1].