The company's revenue/net profit attributable to the mother in 2022 was 148.21/5068 billion yuan, +8.9%/-1.2% year on year. The performance was stable under fluctuations affected by the epidemic. Among them, the three major clothes/real estate/investment businesses contributed 5.83/23.01/21.137 billion yuan in profit respectively, -33.8%/-0.26%/+16.02% year on year. 1Q23 revenue/net profit reached 3.27/87 billion yuan, -56%/-59% over the same period last year, mainly due to a 91.6% decline in real estate business profit and a 39.8% increase in profit in the fashion sector. Looking ahead, the company's main brand is expected to continue to develop steadily as demand for menswear recovers in 2023, and the rest of its sub-brands are also expected to gradually contribute more after adjustments over the past two years. Maintain a “buy” rating.

Revenue & non-profit growth was steady in 2022. 1) Revenue and profit: The company achieved operating income of 14.821 billion yuan/ +8.9% in 2022, net profit of 5.068 billion yuan/ -1.2%, after deducting non-net profit of 4.712 billion yuan/ +6.0%. Among them, 4Q22 achieved operating income of 1,995 million yuan/ -44.0%, and net profit of 874 million yuan/ -35.1%. 2) Costs and expenses: The company's gross margin in 2022 was 55.22% /-2.77pcts, and the sales/management/R&D expenses ratio was 17.81%/6.78%/0.55%, compared to -2.63/-0.74/+0.04pcts. The company achieved investment income of 3.306 billion yuan/ +8.2% in 2022. Investment income includes long-term equity investment income (2.12 billion yuan) calculated by the equity method, interest income from other debt investments during the holding period (186 million yuan), and dividend income from other equity instrument investments during the holding period (797 million yuan).

Clothing business: The main brand is resilient, and the channel structure is continuously optimized. The company's branded clothing business achieved revenue of 5.410 billion yuan/ -8.89% in 2022, and net profit of 583 million yuan/ -33.8%. By brand, the revenue and profitability of the main brands are relatively stable. YOUNGOR achieved revenue of 50.13 billion yuan/ -1.61%, with a gross profit margin of 74.04% /-0.75pct; the remaining sub-brands achieved a total revenue of 398 million yuan/ -52.87% due to fluctuations in business and channel adjustments, with a gross margin of 63.21% /-6.29pcts. Looking at each channel, the company's online sales revenue was 813 million yuan/+12.06%, gross margin was 65.38% /-2.89pcts, offline sales revenue was 4,598 million yuan/-11.80%, and gross margin was 74.60% /-0.24pct. Among them, the company's directly-operated stores/franchise stores/others achieved revenue of 39.30/2.01/1,279 billion yuan, compared to -11.78%/+1.76%/-0.52%, and gross margin was 77.51%/71.18%/60.45%, respectively, and +0.07/-2.62/-1.82 pcts over the previous year. The company continues to cultivate the main brand YOUNGOR and adjust the positioning and development path of sub-brands such as MAYOR, Hart Marx, and HANP. As of 2022, the total number of Yagor brand outlets was 2,166 /-548, and the number of newly opened/closed stores was 119/667 respectively.

Other business: Real estate projects were delivered smoothly, and the investment business was running smoothly. 1) Real estate business: The company's real estate sector achieved a total revenue of 8.550 billion yuan/ +25.06% in 2022, and the net profit of the mother of the mother reached 2,301 million yuan/ -0.26%.

Among them, the company achieved a total sales amount of 6.741 billion yuan/ -24.5%, sales area of 295,900 square meters/ -30.3%, achieved carry-over revenue of 8.312 billion yuan, a carry-over area of 248,900 square meters, and a carry-over area of 1,627,400 square meters at the end of the period. In 2022, the company started 4 new projects, with a new construction area of 639,700 square meters; 4 completed projects, with a completed area of 492,600 square meters; by the end of 2022, there were 13 projects under construction, with an area of 2,036 million square meters; 2 land reserves at the end of the period, with a land area of 247,700 square meters, with a planned construction area of 489,900 square meters. 2) Investment business: Net profit of 2,137 billion yuan/ +16.02% was achieved in 2022. The company's investment projects were restructured in 2022, holdings of Blum Oriental and other projects were increased, shares of China Pipeline Network Group Joint Pipeline Co., Ltd. were sold, and holdings of Venture Huikang, Zhongji United, Huaxia Bank, etc. were reduced.

1Q23 was affected by the real estate business and performance was pressured, and the clothing business recovered significantly. 1Q23 The company's revenue/profit was $32.66/867 million, or -56.02%/-59.04% year on year, gross margins and net margins were 50.18%/26.56%, and -5.01/-1.95pcts year over year. Among them, the 1Q23 fashion sector achieved restorative growth, with revenue of 2,002 billion yuan and net profit of 352 million yuan, up 17.70%/39.80%, respectively. Among them, the revenue of the main brand YOUNGOR reached 1.55 billion yuan, an increase of 18.71% over the previous year. However, due to the cyclical impact of real estate development, the operating income/net profit of the real estate sector fell 77.77%/91.55% year-on-year in the current period. The 1Q23 investment business achieved net profit of 378 million yuan, an increase of 57.44% over the previous year. As of 1Q23, the company's cash on books was 11.428 billion yuan, an increase of 4.8% over the previous year. Looking ahead to 2023, the company will continue to promote corporate culture building and institutional innovation to promote the company's high-quality development. Fashion sector: Accelerate the construction of fashion experience centers for major brands, deepen the deep integration of online and offline, and fully promote the opening and operation of independent stores for other brands; real estate development business: continue to optimize the sales repayment process, strengthen quality control and control, and plan to promote new projects; invest in the industry: focus on strategic investment and mergers and acquisitions opportunities, strengthen post-investment management, accelerate the exit of financial investment projects, and optimize investment cash flow.

Risk factors: The local epidemic has repeatedly affected the company's offline store sales and real estate business sales and construction; the company's brand aging and brand adjustments and upgrades fell short of expectations; new brand development fell short of expectations; and risks such as fluctuations in the company's investment income due to fluctuations in the operation of invested projects.

Profit forecast, valuation and rating: Considering the decline in the real estate business, the company's 2023-2024 EPS forecast was lowered to 0.95/1.11 yuan (the original forecast was 1.16/1.30 yuan), adding 1.25 yuan to the 2025 EPS forecast.

According to the segmental valuation method, the apparel business referred to the valuation of comparable companies in the industry in 2023 (Bienleffen 22xPE, Septwolves 20 times PE, Happy Bird 16 times PE, Wind's consistent expectations), gave the company's clothing business 15 times PE in 2023, corresponding to the target market value of 13.4 billion yuan; the real estate business was given 0.8 times PB in 2023 (with reference to Vanco A, Poly Development, Xincheng Holdings, Jindi Group, Binjiang Group, Rongan Real Estate, Greentown China's 2023 average of about 0.8 times PB, consistent expectations), corresponding to the target market, Wind The value is 5.4 billion yuan; the investment business refers to the cost method and equity method to give the target market value of 287 to 35.2 billion yuan; after comprehensive calculation and a further 10% discount is given to the company group, we gave the company a target market value of 42.8 to 48.6 billion yuan in 2023. Conservative considerations led to the final target price of 9 yuan for 2023. Maintain a “buy” rating.