Incident: The company released a quarterly report. 23Q1 achieved operating income of 26.02 billion yuan, a decrease of 22.5% over the previous year; the net profit of Gumo was 150 million yuan, a decrease of 79.1% from the previous year, and the net interest rate of Gummo was 5.6%, a decrease of 15.1pct over the previous year, mainly due to the slow progress of amortization and related services during the income period during the rent-free epidemic; net profit after deducting non-return to the mother was 220 million yuan, a decrease of 54.5% over the previous year, and the net interest rate of non-return to the mother was 8.3%, a decrease of 5.8 pct over the previous year, a decrease of 5.8 pct from the previous year, turning negative from the previous year.
The company's comprehensive gross margin in 23Q1 was 59.8%, a decrease of 1.7 pct over the previous year and an increase of 6.7 pct over the previous month. The fee rate for the period was 41.3%, an increase of 5.3 pct over the previous year. Among them, the sales/management/R&D/finance expense ratio was 9.8%/11.2%/0.2%/20.1%, respectively, with a year-on-year change of +1.6pct/+0.7pct/-0.2pct/+3.2pct.
In the first quarter of '23, the company had opened its own shopping malls and obtained revenue of 1.64 billion yuan during the reporting period, a decrease of 24.4% over the previous year. The gross margin was 71.9%, a decrease of 4.2 pct over the previous year. Looking at the revenue of self-operated shopping malls by operating format, own/leasing/joint ventures achieved revenue of 13.6/2.1/067 billion yuan respectively, a year-on-year change of -23.8%/-30.4%/-12.9%; gross margin was 80.9%/21.2%/48.6%, respectively, a decrease of 3.8pct/4.2pct/3.8pct over the previous year.
As of 23Q1, the company operated 91 self-operated shopping malls. Compared with the end of '22, the company did not open new self-operated shopping malls, closed 2 self-operated shopping malls, transferred 1 mall from self-operated to managed, managed 285 shopping malls, and operated 8 home furnishing shopping malls through strategic cooperation; in addition, the company authorized 55 home building materials projects through franchising, including 472 home building materials stores/industrial streets. As of 23Q1, the company's 19 self-operated shopping malls have a planned construction area of about 2.97 million square meters; among the shopping malls being prepared, 309 contract projects have obtained land use licenses/land plots.
Profit forecast and rating: We expect the company's net profit for 23-24 to be 2,255/2.53 billion yuan respectively, an increase of 200.9%/12.4%. The closing price on April 28 corresponds to PE 10 and 9 times, respectively. As a leading furniture store, the company focuses on its main business. The core self-operation indicators are improving, and a certain valuation premium is given. For reference, the comparable company gave a PE valuation of 12-13 times in 23 years, corresponding to a reasonable value range of 6.21-6.73 yuan, giving it a “superior to the market” rating.
Risk warning: Competition in the industry has intensified, home improvement orders have fallen short of expectations, and the pace of store development has fallen short of expectations.