Jason Furniture (Hangzhou) (SH:603816) SINOLINK SECURITIES·2024-04-30 03:00Investment Rating - The report maintains a "Buy" rating for Kuka Home (603816 SH) [2] Core Views - Kuka Home achieved revenue/net profit attributable to parent/non-GAAP net profit growth of 6 7%/10 7%/15 3% YoY to RMB19 21/2 01/1 78 billion in 2023 with Q4 revenue/net profit up 19 5%/23 5% YoY to RMB5 08/500 million [2] - In Q1 2024 revenue/net profit attributable to parent/non-GAAP net profit grew 10 0%/5 0%/10 3% YoY to RMB4 35/420/380 million meeting expectations [2] - The company's domestic sales grew steadily while overseas sales recovered strongly in H2 2023 driven by furniture destocking nearing completion ODM new customer expansion and OBM business growth [2] - Overseas factory cost reduction and efficiency improvements boosted gross margin by 2 0pct to 32 8% in 2023 with overseas gross margin up 4 7pct to 25 5% [2] - The company has clear strategic directions including domestic transformation to "whole home" operations and overseas transformation to "multi-country/localized value chain integration" [2] Financial Performance - 2023 revenue breakdown: domestic sales +6 1% YoY to RMB10 94 billion overseas sales +6 8% YoY to RMB7 52 billion [2] - Product category growth in 2023: sofas +4 2% beds +15 4% integrated products +0 4% customized furniture +15 6% [2] - 2023 gross margin improved by 2 0pct to 32 8% with overseas gross margin up 4 7pct to 25 5% [2] - 2023 expense ratios: sales +1 1pct to 17 5% management (including R&D) -0 5pct to 3 2% financial +0 7pct to 0 0% [2] - Q1 2024 gross margin improved by 1 0pct to 33 1% with expense ratios: sales +0 5pct to 17 4% management (including R&D) +1 3pct to 4 7% financial -1 3pct to -0 2% [2] Strategic Development - Domestic strategy focuses on "whole home" operation transformation and channel-driven online sales [2] - Overseas strategy emphasizes "multi-country/localized value chain integration" with ODM business improvement and OBM business growth [2] - Domestic "warehousing distribution and service" system achieved over 30% coverage in 2023 laying foundation for long-term growth [2] Valuation and Forecast - EPS forecast for 2024-2026: RMB2 87/3 36/3 88 [2] - Current PE ratios: 12x/10x/9x for 2024-2026 [2] - Revenue forecast for 2024-2026: RMB22 31/25 83/29 79 billion [4] - Net profit forecast for 2024-2026: RMB2 36/2 76/3 19 billion [4] Historical Performance - 2023 revenue/net profit growth: +6 7%/+10 7% [4] - 2022-2023 ROE: 20 40%-20 88% [4] - 2022-2023 P/E: 19 37x-14 34x [4] - 2022-2023 P/B: 3 95x-2 99x [4]