Event

On March 7, 2023, the company issued a performance forecast with an estimated 2022 operating income of about 4.72 billion yuan /-23.1% and a net profit of-3.4 million million yuan /.

Comment

A series of measures to reduce costs and increase efficiency were actively promoted, and losses were significantly reduced in the second half of the year. The operating income of the single-dismantled 2H22 is 2.56 billion yuan /-17.3%, the net profit is-0.62 billion yuan, and the corresponding net interest rate is-2.4%. The net interest rate is 1.6%, which is significantly lower than the loss of-278 million yuan of 1H22 (excluding shop closure-related loss of about-240 million, net interest rate of about-11.2%) and 2H21's-236 million (excluding shop closure-related loss of about-183 million, net interest rate of about-5.9%). Loss reduction is mainly due to the promotion of a series of cost reduction and efficiency measures, including supply chain integration of the two major brands, rent renegotiation and rent-to-sales ratio control of new stores, unit decoration cost control, store distribution promotion incentives and labor streamlining, and so on. In addition, the impact of the Q3 epidemic is relatively small, and hot pot consumption is relatively high in the summer. In line with the company's own business strategy, the company has benefited from eating, sipping and sipping. However, the spread of the Q4 epidemic aggravated throughout the country, and the infection peak was ushered in after the opening of the Q4 brand in December. The proportion of stores in the northern part of the brand is higher and the negative impact is more serious, so the overall loss has not been reversed in the second half of the year.

January, February steady repair, optimistic about the recovery of consumer demand and the company's own reform and optimization to repair elasticity. The demand picks up + the company launches activities such as stored value. In January and February 2023, it is expected that the same store of the same brand will recover better. It is expected that there will still be year-on-year high single-digit growth of the same store in February under the Spring Festival dislocation; there will also be repairs. At the same time, due to the relatively high proportion of high-line cities in the shop structure, it is expected that the upward revision potential will not be fully released under the high tide of returning to hometown during the Spring Festival this year, and we continue to be optimistic about the further recovery in the future.

Personnel adjustment landed, a series of reforms actively promoted, optimistic about the release of store profits and accelerated store opening.

The company began to reorganize its organizational structure in the second half of 21 years, implementing stronger executive equity incentives and distribution of grass-roots stores; from scale-oriented to profit-oriented in the past, and future expansion based on improving business quality. Through the fine management of rent, manpower, capital expenditure and other dimensions, it is estimated that the monthly profit and loss balance of the two major brands will decline by about 50,000 yuan in 22 years, and the decline of UE break-even point will enlarge the upward flexibility of operating leverage. It is estimated that about 120 new stores will be opened in 23 years (according to the list of official brand stores, 36 new ones have been opened by the end of February). It is expected to open about 120 new stores in 23 years (according to the list of official brand stores, 36 new ones have been opened by the end of February). Speed up the pace of going out to sea, and it is expected to open 90 + in 23 years.

Earnings forecast, valuation and rating

The core focus of the company is the performance and valuation repair brought about by the reversal of the plight at the alpha level and the recovery after the epidemic at the β level. it is estimated that the 22E~24E income will be 73.4pm 10.77 billion yuan, the net profit from the home will be 3.9 / 690 million yuan, and the EPS will be-0.30pm 0.36pm, respectively, corresponding to 23,00024E PE 19.4X/11.0X, maintaining the "buy" rating.

Risk hint

The impact of the epidemic is longer than expected, the progress of internal reform is not as expected, the price of raw materials is rising and so on.