The short-term pressure on profitability caused by the superposition of multiple factors is expected to be gradually repaired in the future, and the company will be downgraded to the increase rating. On April 26, the company released the 22-year annual report and the 23-year quarterly report. 22 years of revenue 15.CNY 400 million,+35.6% year-on-year, realizing net profit of 1.RMB 800 million yuan, -44.9% year-on-year, and the profit was lower than our expectation (2.900 million yuan), mainly due to the decrease of gross profit rate of the Company and the increase of expenses. 23Q1 Company Realized Revenue 2.800 million yuan,+4.6% year-on-year;The net profit of the parent company was RMB 40 million yuan, with a year-on-year rate of -17.9%。Considering that the growth of the company's stock business is slowing down due to the impact of the e-commerce market, and the operation of new brands requires higher initial investment, we adjusted the net profit of the parent company in 23-24 years to 2.8.310 million yuan (previous value: 3.5.400 million Yuan), the net profit of the new 25 years is 3.RMB 500 million Yuan, referring to the consistent expectation of 30xPE of Wind of comparable company in 23 years, considering the uncertainty of new category and new channel development of the company, the company is given 27xPE for 23 years with target price of 32.1 yuan, downgraded to increased rating.

The category and platform expansion is steadily promoted, and it is expected to promote the rapid growth of GMV for 22 years in the future, with the company's GMV reaching 264.RMB 900 million yuan, basically flat year-on-year. By channel, the performance differentiation of each channel is obvious. Tmall GMV is basically flat year-on-year, Vipshop Holdings Limited GMV declines year-on-year, Pinduoduo GMV grows rapidly. In terms of categories, the GMV of newly expanded food and health care categories grows rapidly, while the GMV of beauty cosmetics in traditional advantageous categories is basically flat, and the GMV of household appliances and fashion play is affected by relevant policies, and the GMV declines to a certain extent. 23Q1, Company revenue +4.6%, among which, the beauty category increased by more than 10%, and the trend continued to decline year-on-year due to the influence of policies.

The superposition of internal and external factors leads to pressure on profitability, and it is expected to gradually repair the gross profit rate of the company in 22 years to 33.6%, -14.0pct year-on-year, mainly due to 1) the decrease in the proportion of brand management service income with high gross profit, 2) the increase of overall operation cost due to external environment, and 3) the large investment in the early stage of new brand;Sales expense rate is 10.5%, year-on-year +3.0pct, mainly due to the increase of employee salary caused by the increase of talent reserve of the Company;The administrative expense rate was 5.3%, year-on-year-1.9pct。23Q1, the gross profit rate of the company was- 9.8pct to 34.3%, mainly due to the decline in the proportion of high-margin brand management services.

Waiting for the new brand customers to gradually mature and improve operational efficiency

In 22 years, the Company has continuously expanded consumer brands and added 42 brand customers such as Mentholatum and Vita tea/milk. Due to factors such as climbing period of new brands, repeated epidemic situation and intensified competition, the profitability of the Company is under short-term pressure. Looking forward to 23 years, the company will continue to practice the strategy of "E-commerce global service provider + new consumer brand accelerator", continuously invest in the construction of organizational capability and IT R & D capability, which is expected to improve operation efficiency and promote profitability repair. We expect that the net profit of parent company will reach 2.8. RMB 310 million and RMB 350 million Yuan. Referring to the consistent expectation of 30xPE of Wind in 23 years of comparable companies, considering the uncertainty of the development of new categories and new channels of the Company, the Company is given 27xPE for 23 years with target price of 32.1 yuan, downgraded to increased rating.

Risk warning: new business development is less than expected;The expansion of new categories is not smooth.