Loctek's 2023 Annual Net Profit Reaches Approximately CNY 634 Million

On April 18, 2024, Loctek (300729:SZ) released its annual report for the year 2023. During the reporting period, the company achieved a total operating income of CNY 3.902 billion, representing a year-on-year growth of 21.61%. The net profit attributable to the parent company reached approximately CNY 634 million, reflecting a substantial increase of 189.72%. Adjusted net profit amounted to CNY 252 million, marking a year-on-year growth of 142.38%. The net cash flow generated from operating activities stood at CNY 820 million, showing a year-on-year increase of 144.35%. The company raised its cash dividend level, intending to distribute CNY 4 (tax included) per 10 shares to all shareholders.

Loctek's business primarily consists of two major segments. The first focuses on smart home and health-oriented office products centered around linear drive technology, providing comprehensive solutions for smart home and health-oriented office needs. The second segment encompasses the company's derivative business, the Cross-border E-commerce Public Overseas Warehouse Innovative Service Complex Project. This business not only empowers its own cross-border e-commerce operations but also provides services including overseas warehousing and final-mile delivery to over 450 small and medium-sized foreign trade enterprises, gradually offering comprehensive cross-border e-commerce logistics services covering initial sea freight.

In the smart home and health-oriented office business segment, the company continuously diversified its product categories. While maintaining the advantages of its flagship product, the height-adjustable desk, it introduced new categories such as electric sofas and ergonomic chairs, contributing to new revenue growth. During the reporting period, the domestic and international penetration of health-conscious consumption concepts continued to deepen, particularly in European and American countries, where the penetration rates of health-oriented office and smart height-adjustable home products continued to rise. On one hand, consumer demand in Europe and America remained robust, with an ongoing increase in e-commerce penetration and a clear trend of offline-to-online consumption, leading to a maturing overseas e-commerce consumer market. On the other hand, there was an increasing emphasis on personal health, resulting in sustained strong demand for ergonomic products such as height-adjustable desks. In 2023, the company's ergonomic product series achieved a revenue of CNY 2.612 billion, marking an 8.70% year-on-year growth.

In the overseas warehouse business segment, as the penetration rate of e-commerce in the United States continued to rise and the trend of Chinese cross-border e-commerce brands going global strengthened, there was a significant increase in demand for overseas warehouses. The company held a leading position in the medium and large-sized overseas warehouse industry, with a good reputation, having served over 600 outbound enterprises. Through orderly expansion and improvements in warehouse capacity utilization and turnover, the number of outbound shipments significantly increased year-on-year, and the profitability continued to improve. In 2023, Loctek's overseas warehouse business achieved a revenue of CNY 951 million, marking a 94.03% year-on-year growth, with a gross profit margin of 12.69%, an increase of 9.32 percentage points from the previous year.

Simultaneously, the company's independent brand influence continued to grow, showing outstanding performance in independent platforms and demonstrating resilience in the face of consumer market stratification. Leveraging its strong product demand exploration and development capabilities, the company empowered its brand with superior products. In 2023, the sales revenue of independent brand products accounted for 70.66% of the main operating income (excluding overseas warehouse income). Among these, cross-border e-commerce sales revenue amounted to 177,272.01 thousand yuan, marking a 12.59% year-on-year growth. The independent platform sales revenue reached 67,129.85 thousand yuan, showing a 16.72% year-on-year growth.

During the period from 2022 to 2023, Loctek strategically secured 5000 mu of industrial logistics land in the core port areas of the United States at a preemptively lower cost, as part of its transition from small to large warehouses. This move is aimed at meeting the company's future self-built warehouse demands. Calculations indicate that the holding cost of self-built overseas warehouses is one-third to one-half of the leasing cost of overseas warehouses. By increasing the proportion of self-built overseas warehouses, the company can effectively reduce overseas warehouse property costs and expand its profit margins.

In the future, the company will continue to adhere to a philosophy of health, efficiency, and innovation in product research and development, focusing on health-oriented office and smart home sectors, centered around linear drive core technology. Simultaneously, the company will further consolidate its cross-border e-commerce business model, accelerate category expansion, channel diversification, and market expansion, continuously nurturing new performance growth points. Loctek will persist in investing in and developing public overseas warehouse operations, actively expanding in the US market and exploring non-US markets, driving cost reduction in various logistics links, and achieving sustained and healthy development of the company's overseas warehouse business.

As of the time of this report, Loctek's stock is priced at CNY 19.08 per share, with a total market value of CNY 5.965 billion.