Event: Macalline releases 2022 annual report. In 2022, the company achieved operating income of 14.138 billion yuan, a year-on-year decrease of 8.86%; net profit of 749 million yuan, a year-on-year decrease of 63.43%; net profit after deducting non-return net profit of 616 million yuan, a year-on-year decrease of 62.81%. Among them, in the 2022Q4 quarter, the company achieved operating income of 3.654 billion yuan, a year-on-year decrease of 12.12%; net profit of 569 million yuan, a year-on-year decrease of 3152.19%; net profit after deducting non-return net profit of 504 million yuan, a year-on-year decrease of 291.47%.
The operation of self-operated shopping malls is resilient. In 2022, the company continued to implement the “asset-light, operation-heavy” development strategy. By expanding the number of outsourced shopping malls and franchised shopping malls, the company steadily increased its market share and controlled the company's capital investment in self-built shopping malls. By the end of 2022, the company operated 94 self-operated shopping malls, 284 managed shopping malls, 8 strategic cooperative shopping malls, and 57 franchised home building materials projects, including 476 home building materials stores/industrial streets. By business type, 1) In terms of self-operated business, company leasing and related revenue in 2022 was 7.868 billion yuan, down 2.8% from the previous year. The average occupancy rate of self-operated shopping malls reached 85.2%. Among them, self-operated shopping malls in Tier 1 and 2 cities accounted for more than 80% of the operating area. 2) In terms of outsourcing business, the company's revenue from outsourcing business in 2022 was 2,376 million yuan, a year-on-year decrease of 27.0%, mainly due to pre-project brand consulting and entrustment management, project commercial management consulting fees and commercial consulting fees, and reduced revenue from investment commission projects. In '22, the company opened a total of 12 new managed shopping malls, with an average occupancy rate of 86.7%. The gradual expansion of managed shopping malls helped the company achieve regional replenishment and achieve rapid penetration into sinking markets under an asset-light model. By the end of 2022, among the shopping malls prepared by the company, 315 signed projects had obtained land use warrants/land plots, and sufficient reserve projects.
In 2022, the company formulated a multi-store shopping mall positioning plan in the same city, and selected 100 MALL shopping malls representing the strategic layout of the group's products and consumers in a hierarchical and precise operation: 32 No. 1 stores, 9 premium malls, and 59 benchmark shopping malls. At the same time, the company continues to implement the “expand categories and focus on operation” strategy to optimize the brand structure. In 2022, the company continued to extend its main categories to the top ten categories, accelerate the construction of theme halls, actively introduce medium- and high-frequency categories such as smart appliances and catering, and create integrated consumption in multiple business formats, with a view to quickly seizing consumer sentiment in the middle and high-end markets.
23Q1 Home improvement consumer traffic picks up, 315 boosts performance is impressive
Since the beginning of the year '23, there has been a remarkable recovery in consumption in the home improvement market, and the 315 and May Day promotions are expected to support the continued performance of leading stores in Q2. According to data from the National Bureau of Statistics, the sales volume of building materials and home furnishing stores above the national scale reached 113,027 billion yuan in February, up 44.18% from the previous month and 34.54% from the previous year. According to Red Star Macalline's national statistics, during the “315FUN Shopping Festival” period, passenger flow increased 15.8% year on year, number of consumers increased 23% year on year, total customer price increased 6% year on year, and sales amount achieved a steady increase compared to last year. Brands such as Chivas, Jiumu, Midea, and Fangtai all achieved double-digit year-on-year growth and even doubled. Meanwhile, Red Star Macalline launched the “Annual 51 Shopping” on March 22, making it the first year to launch the May Day promotion. It plans to launch a cabinet category festival and a bathroom category festival to accelerate the arrival of the next sales cycle.
Profitability was under pressure in '22, and cost reduction and efficiency were progressing in an orderly manner
The company's comprehensive gross margin in 2022 was 58.36%, year-on-year -3.31pct. Among them, the gross margin of self-operated shopping malls/managed shopping malls/construction and design/home improvement related services and product sales was 73.23%/40.65%/15.34%/23.89%, respectively, and -3.89%, year-on-year -3.87 /- 11.71/-11.98 /3.34 pct. 22Q4 The company's comprehensive gross margin was 53.15%, -4.63 pct year on year.
In terms of expenses for the period, the cost rate for the 2022 period was 37.74%, the year-on-year -4.73 pct, the sales/management/development/finance expense ratio was 11.00%/9.98%/16.43%/0.33%, respectively, and -2.30/-2.94/+0.57/-0.06 pct, respectively. Among them, the cost rate for the 22Q4 period was 41.39%, the year-on-year -5.14pct, the sales/management/development/finance expense ratio was 14.07%/11.89%/0.33%/15.10%, respectively, and -2.58/-3.74/-0.12/1.30 pct, respectively. Under comprehensive influence, the company's net sales interest rate in '22 was 6.07%, -8.04 pct over the same period last year.
Investment advice: The company continues to steadily advance the “light assets, heavy operation, and reduced leverage” strategy, and profitability is expected to gradually recover. We expect Macalline's operating income for 2023-2025 to be 156.21, 167.95, 18.023 billion yuan, up 10.49%, 7.51%, and 7.31% year on year; net profit for return to the mother will be 19.82, 22.75, and 2,547 billion yuan, up 164.66%, 14.82%, and 11.93% year on year, corresponding PE to 12.2x, 10.6x, 9.5x, maintaining the investment rating of buy-A.
Risk warning: New retail development falls short of expected risks; risk of cyclical fluctuations in the real estate industry; store expansion falls short of expected risks.