SKSHU(SH:603737) Guoxin Securities·2024-05-08 14:00Investment Rating - The investment rating for the company is "Buy" [1][3][36] Core Views - The company's performance in 2023 was impacted by impairment provisions and increased expenses, but operating quality continues to improve. Revenue reached 12.48 billion yuan, a year-on-year increase of 10.0%, while net profit attributable to shareholders was 174 million yuan, a decrease of 47.3% [1][5][36] - The company is optimistic about the potential for further channel expansion and improvement in operating quality, maintaining a "Buy" rating. The expected EPS for 2024-2026 is 1.30, 1.95, and 2.46 yuan per share, respectively, with corresponding PE ratios of 28.1, 18.8, and 14.9 times [1][36] Summary by Sections Financial Performance - In 2023, the company reported a revenue of 12.48 billion yuan, with a year-on-year growth of 10.0%. The net profit attributable to shareholders was 174 million yuan, down 47.3%, and the EPS was 0.33 yuan per share. The fourth quarter revenue was 3.07 billion yuan, a decrease of 9.6% year-on-year, with a net loss of 381 million yuan [1][5][10] - For Q1 2024, revenue was 2.07 billion yuan, a slight increase of 0.6% year-on-year, while net profit attributable to shareholders rose by 78.2% to 47 million yuan, mainly due to increased government subsidies [1][5][10] Revenue Breakdown - The revenue from distribution and direct sales in 2023 was 10.17 billion yuan and 2.06 billion yuan, respectively, with year-on-year changes of +18.3% and -10.9%. The retail and small B business segments are being expanded, with the distribution channel's share increasing [1][10][26] - In terms of product categories, revenue from home decoration wall paint and engineering wall paint grew by 2.6% and 9.5%, respectively, while sales volumes increased by 3.3% and 22.9% [1][10][26] Cost and Margin Analysis - The overall gross margin for 2023 was 31.5%, an increase of 2.6 percentage points year-on-year, benefiting from lower raw material prices. However, the expense ratio increased to 26.2%, up 2.7 percentage points, primarily due to higher sales and marketing expenses [1][26][31] - The company reported a significant improvement in operating cash flow, with a net cash flow from operating activities of 1.41 billion yuan in 2023, a year-on-year increase of 47.3% [1][31][36] Future Outlook - The company is expected to continue optimizing its channel structure and is focused on enhancing its presence in the consumer and small B segments. The impairment provisions are seen as a risk release, and the operating quality is anticipated to improve further [1][36][39]