Glebo (301260. SZ) 2023 performance suffered a "Waterloo". The annual report shows that in 2023, Glebo's revenue and net profit will both decline, and its net profit attributable to the parent will fall to a loss at a triple-digit rate, and its revenue will also face the first decline since its establishment. This is also its first annual report released since its listing.
Glebo's revenue basically comes from overseas, and the pressure on its performance is mainly due to the destocking of overseas retailers. Admittedly, this also poses a lot of pressure on its profitability, coupled with the increase in promotional deductions in the process of destocking, the gross profit margin of Glebo's main products, new energy garden machinery and AC garden machinery, will decline across the board in 2023.
Under the pressure of performance growth, Glebo's performance in the capital market is also difficult to describe, and the latest stock price has been "halved" compared with the issue price.
Revenue declined for the first time after its establishment, and only Q1 achieved profitability
Glebo was listed on the GEM on February 8, 2023, and the company has been engaged in the research and development, design, production and sales of new energy garden machinery since 2007, and is one of the leading enterprises in the global new energy garden machinery industry. The company's business is divided into two major segments, the first is the private label sector with the greenworks brand as the core, and the second major sector is the customer brand (including supermarket brands and ODM) business. Glebo mainly sells its own brand, and its products can be divided into lawn mowers, lawn mowers, washing machines, hair dryers, pruning machines, chain saws, intelligent lawn mowers, intelligent mount lawn mowers, etc.
From 2019 to 2022, Glebo has continuously achieved profitability, with net profit attributable to the parent company of 154 million yuan, 565 million yuan, 280 million yuan and 266 million yuan respectively. However, the performance level in 2021 and 2020 continued to decline, with a decrease of 50.51% and 4.96% respectively.
In 2023, Glebo's performance level has fallen to a loss. According to the annual report, in 2023, Glebo will achieve revenue of 4.617 billion yuan, a year-on-year decrease of 11.4%, and the decline in revenue is mainly affected by the destocking of downstream channels, the corresponding net profit loss attributable to the parent company is 474 million yuan, a year-on-year decrease of 278.4%, and the net profit loss after deducting non-profits in the same period is 428 million yuan, a year-on-year decrease of 293.05%.
In terms of a single quarter, Glebo only achieved a profit of 87.4832 million yuan in Q1, and Q2 to Q4 were in a loss situation, with losses of 141 million yuan, 121 million yuan, and 299 million yuan respectively.
Glebo said that the main reason for the large decline in net profit was the decline in operating income and gross profit margin, which affected the company's gross profit by 291 million yuan, the total sales expenses, research and development expenses, and management expenses increased by 288 million yuan year-on-year, and the financial expenses in 2023 increased by 134 million yuan due to the significant year-on-year decrease in foreign exchange income. The above three reasons totaled the company's operating profit decreased by 713 million yuan.
Glebo said frankly that in 2023, the company will face the biggest challenge since its establishment, and the company's operating income will decline for the first time in 20 years since its establishment, mainly due to the following reasons: first, affected by the Federal Reserve's continuous interest rate hike policy, lower than expected terminal consumer demand and high inventory, the downstream channels will firmly implement the destocking business strategy and reduce the procurement scale of brand owners in stages; The "cold spring" is also one of the important factors for the decline in operating income in 2023.
In addition to Glebo, companies in the same industry have also been affected by the destocking of downstream industries, and their revenues have declined to varying degrees. Daye Co., Ltd. (300879. SZ), Chervon Holdings (02285. HK) revenue in 2023 will decline by 36.91% and 33.7% year-on-year respectively. TTI (00669.HK) HK) revenue fell by more than 10% year-on-year.
Although the company has taken various measures such as opening up new channels, increasing the launch of new products on the market and increasing advertising and marketing, the final revenue level of the private label business is the same as that of the same period in 2022, and the expected growth has not been realized.
At the same time, destocking has also affected the ODM business, which has seen its revenue drop by about 40% compared to 2022. With the completion of destocking, the sales of OMD business will also pick up, and major customers such as TORO and ECHO have sent orders to Glebo. Affected by this, Glebo's performance in the first quarter of 2024 has rebounded, and the annual ODM business revenue is also expected to recover.
According to its simultaneous disclosure of the first quarter results announcement, in Q1 2024, Glebo will achieve revenue of about 1.636 billion yuan, an increase of 5.45% year-on-year, and net profit attributable to the parent company of about 130 million yuan, an increase of 48.46% year-on-year.
Gross profit margin continued to decline, and inventories were high
Glebo's products are mainly sold overseas, and the United States is an important product sales market. At present, Glebo has established three production bases with Changzhou as the core and Vietnam and the United States as the two wings.
Judging from the sales at home and abroad in 2023, Glebo's revenue from overseas will be 4.528 billion yuan, accounting for 98.07% of the revenue, and the revenue will decrease by 11.93% compared with 2022.
In terms of products, the revenue of new energy garden machinery in 2023 will be 3.111 billion yuan, a year-on-year decrease of 20.68%, accounting for 67.37% of the revenue, and the revenue of AC garden machinery will be 1.014 billion yuan, a year-on-year increase of 22.55%, accounting for 21.97% of the revenue.
The scale of revenue has shrunk, and the profit side is also under pressure, and the gross profit margin of Glebo's two main products has declined. Among them, the gross profit margin of new energy garden machinery fell by 3.07% to 24.42%, and the gross profit margin of AC garden machinery decreased by 3.35% to 16.94%.
On the whole, in 2023, affected by downstream destocking, in addition to the decline in Glebo's revenue due to the reduction of procurement in downstream channels, the increase in promotional deductions in the process of destocking will also have a great adverse impact on Glebo's gross profit margin. Its gross profit margin in 2023 will decrease by 3 percentage points year-on-year to 22.72%, and the gross profit will decrease by 291 million yuan year-on-year due to the impact of revenue decline.
In addition, Glebo produced a large amount of inventory and transported it to North America when the price of raw materials and sea freight was high in 2022, but due to the impact of factors such as the detention of North American ports and the shortage of truck land transportation capacity, the inventory sent to North America could not be sold in stores in time during the peak sales season, resulting in a large amount of inventory at the end of 2022. Therefore, in 2023, most of the company's external sales of products will come from the inventory in 2022, and the cost of carrying forward (including raw material costs and sea freight costs) at the time of sales will be correspondingly higher.
In the long run, the gross profit margin of Glebo's products has been declining for many years. From 2020 to 2022, the company's gross sales margin was 35.1%, 27.5% and 25.72%, respectively.
As for the outlook for 2024, Glebo said in the investor relations record sheet that if U.S. inflation falls in 2024, retail demand is expected to strengthen. At the same time, as long as the price of sea freight and raw materials can be maintained at a low level, the cost of the company's newly produced products is low, benefiting from the increase in the proportion of sales of this part of the product, which is beneficial to the company's gross profit margin.
On the other hand, in 2023, the carrying value of Glebo's inventory will decrease by 26.02% year-on-year to 2.199 billion yuan, accounting for 33.38% of current assets, which is still significant. Regarding the decline in the amount of inventory, Glebo said that the main reason is that the company is actively digesting inventory while reducing production, and the scale of inventory goods is declining.
At present, Glebo's inventory is mainly based on inventory goods, accounting for more than 60% on average, mainly because on the one hand, the two major production bases in Changzhou and Vietnam maintain normal inventory levels, and on the other hand, the company will have appropriate stock in overseas European and American warehouses to quickly respond to customers' supplementary orders or temporary needs; in addition, the company vigorously expands its B2C e-commerce business, and the stock demand of overseas warehouses has also increased accordingly. In 2023, the amount of Glebo's inventory price decline provision will be 102 million yuan.
The performance support is insufficient, and Glebo's share price has fluctuated all the way down since its listing. As of the close of trading on April 26, the stock price has fallen to 12.4 yuan, down 59.81% from the issue price of 30.85 yuan. (This article was first published in Titanium Media APP, author: Lu Wenyan)