The net loss for fiscal year 2022 was $331 million, in line with the performance forecast guidelines. In fiscal year 2022, the company's revenue was 4.725 billion yuan/ -23.1%; net loss was 331 million yuan, a loss of 283 million yuan for the same period last year, in line with profit warning guidelines; Guimu's net loss was 353 million yuan, with a loss of 293 million yuan for the same period last year (calculated loss of 0.60/227 million yuan from closing stores in fiscal year 22/21). 2022H2, the company's revenue was 2,568 million yuan/ -17.2%; net loss was 53 million yuan, with loss of 278 million yuan in the same period last year; Guimu's net loss was 74 million yuan, with a loss of 243 million yuan for the same period last year (22H2/21H2 calculated impairment losses of 0.10/131 million yuan).

By brand, Xiabu's brand revenue was 2,286 million yuan/ -35.1%, with a revenue share of 48.4% /- 90pct, segment operating performance - 193 million yuan (+34.08 million yuan in the same period in 2022); Minato Minato's revenue was 2,206 million yuan/ -6.3%, accounting for 46.7% /+8.4pct, segment performance - 71.1 million yuan (same period in '22 +71.22 million); other revenue was 233 million yuan/ -13.3%, and Minato's revenue contribution continued to increase.

Switch store: Xiabu is nearing the end of closing, and Minato has stepped up its downturn. In fiscal year 2022, the company opened 41 new Xiabu/44 Minato Minato/1 in Chiyaki, closed 81 Xiabu/3 Minato Minato, and operated a total of 801 Xiabu, 224 Minato Minato, and 1 Minato Minato by the end of 2022. By city, the proportion of Xiabu 1-3 line was 37.6%/36.5%/26.0%, compared to -0.9/+0.5/+0.4pct; the Minato Minato brand line 1-3 and overseas accounted for 36.2%/56.3%/2.7%/4.9%, and the year-on-year share was -3.2/+2.2/+0.5/+0.5pct.

The customer unit price increased, but the turnover rate/same store performance was under pressure. In terms of passenger unit prices, in fiscal year 2022, the unit price of Xiabuke was 63.9 yuan/+1.4 yuan; the unit price for passengers in Tier 3 to 3 cities was +2.3/+0.4/+1.1 yuan; the unit price for Minato port visitors was 150.9 yuan/+10.3 yuan; and the unit price for customers from Tier 1-3 and overseas cities was +5.5/+7.3/+4.7/+4.7/+28.4 yuan year-on-year, driven by an increase in the share of group buying business under the pandemic. In terms of seat turnover, in fiscal year 2022, the Xiabu/Minato reversal rate (Taiwan) was 2.0/1.9 times, -0.3/-0.6 times compared to the previous year.

In terms of same-store data, in fiscal year 2022, Xiabu same-store sales were -23.0%, and Minato same-store sales were -22.0%.

The share of employees & rent has increased, and 2022H2 cost management is beginning to bear fruit. In fiscal year 2022, raw material costs accounted for 38.1%/flat; employee costs accounted for 32.9% /+3.1pct; rent depreciation accounted for 25.7% /+3.7pct. The increase in labor and compromises was due to a decline in the revenue side. 2022H2, the company's raw material costs were 38.4% /-0.5pct; employee costs were 31.1% /+2.0pct; property rent and depreciation amortization accounted for 23.7% /+1.8pct. The management and control of various costs during the period began to bear fruit.

Stored value promotions put pressure on short-term gross margins, and the opening of stores of the three major brands accelerated again. The company launched a stored value promotion on December 17, 2022. The vouchers will expire at the end of March 2023. Short-term gross margin is under downward pressure. In 2023, Xiabu plans to open/close 120/29 new stores, of which Shanghai & Guangdong stores will be no less than 50%; Minato Minato expects to open/close 74/13 new stores in the domestic region in 2023; and the new brand Chiyaki plans to open 20 new stores. Furthermore, 26 new stores were opened overseas, with Minato accounting for the majority.

Risk warning: Repeated epidemics, store expansion falls short of expectations, food safety risks, increased industry competition. Investment suggestions: The Xiabu store recovered to 136%/107% of previous years in January-January 2023, and the March sales achievement rate was 107%, showing a good recovery; however, Minato Minato recovered about 103%/90% in March, and the sales achievement rate in March was 95%. We believe that the effects of Minato Minato's internal management adjustments have not been fully reflected, and it still takes time to observe. Taking into account the gross profit impact of stored value promotions and the pace of brand segment recovery & store expansion, we expect the company to achieve revenue of 74.40/89.46/10.660 billion yuan in 2023-2025, respectively, and the return performance was 321/4.47/616 million yuan respectively (the original forecast was 321/666/100 million yuan. Based on the uncertainty of the long-term expansion of the Minato Minato brand, the profit forecast for 24 years was temporarily revised). The year-on-year growth rate was 191%/39%/38%, and the corresponding PE was 19/13/10x, maintaining “growth” and “growth” of ratings and ratings It is expected that management improvements will bring actual implementation results on the management side.