Incident Overview
The company's revenue/net profit attributable to non-attributable net profit/operating cash flow in 2022 was 11.39/0.70/-0.70/-0.12/202 billion yuan respectively, up -8.35%/28.38%/-163.69%/543.21%. Excluding non-loss, below net profit was mainly due to non-recurring profit and loss contributions such as asset disposal income of 18 million and fair value change profit and loss of 48 million yuan; however, operating cash flow was higher than net profit due to increased impairment, reduced accounts receivable, and increased accounts payable; plus asset impairment losses, core energy technology losses, and increased accounts payable Losses again Net profit/non-net profit after excluding the impact of profit and loss from changes in fair value was $162/80 million, an increase of 98%/70% over the previous year. In 22Q4, the company's revenue/net profit attributable to the mother/net profit after deducting it was 391/0.59/11 million yuan respectively, up -33%/136%/-12% over the previous year.
The 2023Q1 company's revenue/net profit attributable to the mother/ net profit after deducting non-return to the mother was $243/0.18/013 million respectively, up 14.63%/123.97%/573.51% year-on-year.
Analytical judgment:
Outdoor footwear and equipment all declined, and Discovery and children's clothing continued to grow on a low base, bucking the trend and opening stores. Revenue split: (1) By product, the revenue for outdoor clothes/outdoor shoes/outdoor equipment/chips/others was 8.73/1.61/0.87/0.08/0.08/10 billion yuan respectively, up -3.84%/-18.58%/-25.83%/100%/-48.23%. (2) By brand, Pathfinder/Discovery/ToreadKids/Toread.x achieved offline revenue of 6.87/0.64/0.35/012 million yuan respectively, an increase of -18%/23%/67%/-8% over the previous year. The number of Pathfinder/TOREADKIDS/TOREAD.X stores was 728/57/11 respectively, a net increase of 50/34/3. (3) By channel, online/direct management/franchise/alliance/group major customer business and other revenue was 3.22/1.82/3.69/1.12/1.12/143 million yuan respectively, up -6.47%/-20.86%/-5.50%/181.17%/-44.73%. (4) At the end of '22, the company had 796 stores, with a net opening of 87. Of these, direct operation/franchise (joint operations) were 145/651, respectively, up 19%/7%, respectively; in '22, direct-run store efficiency/franchise (joint venture) single store shipments were 126/57 million yuan/year, down 2%/12% from the previous year; the single store area was 102/93 square meters, up 1%/-3% year-on-year, respectively. Direct operation/franchise sales were 1.23/0.61 million yuan/year, an increase of -3%/-9%, respectively. The efficiency of mature direct-run stores that have been in business for more than 12 months was 1.45 million yuan/year, an increase of 8.6% over the previous year. (5) By region, the Northeast and Southwest regions continued to grow, and the core region of North China declined significantly; in '22, South China/North China/East China/Northwest/Southwest China achieved revenue of 0.20/0.75/3.75/3.79/2.34/0.51/036 billion yuan respectively, up -34%/62%/-30%/18%/-25%/2%/-25%/2%.
The chip business fell short of expectations. Beijing Xinneng's net profit before interest and tax was 843/-33.627 million yuan, and the commitment completion rate was 12%/0%. The chip business was mainly affected by miniLED promotion falling short of expectations, the slowdown in global consumer electronics demand, which led to weak demand for display driver ICs, and supply chain disruptions, cost increases, and customer development speed falling short of expectations due to the pandemic. Since the gambling performance did not meet expectations, the total number of shares to be compensated was 3.9 million shares. The impact of Beijing Xinneng on the company's net profit from the merger in March '22 to the end of the year was -41,947,600 yuan.
Online gross margins have improved dramatically. The gross margin in '22 was 51.69%, an increase of 11.30 PCT over the previous year. Looking at channels, online/direct/franchise/alliance/group major account business and other gross margins were 52.17%/68.07%/41.67%/48.79%/59.12%, up 10.66/4.65/8.29/27.51/24.91PCT from the previous year. By product, the gross margin of outdoor clothes/outdoor footwear was 54.04%/47.41% respectively, up 11.46/9.79 PCT year-on-year. 23Q1 gross margin was 48.86%, an increase of 3.10PCT over the previous year.
The increase in net interest rate was far lower than gross margin mainly due to higher cost rates and impairment charges. The net interest rate in '22 was 4.72%, an increase of 0.39 PCT over the previous year. Looking at the expense ratio, the sales/management/R&D/finance expenses ratio in '22 was 28.27%/10.80%/5.18%/-0.61%, respectively, up 3.25/2.91/1.64/-0.21PCT over the previous year. Asset impairment loss/revenue was -8.60%, down 6.45% year over year. The income tax rate was 10%, down 15 PCT from the previous year. The net interest rate for 22Q4 was 8.23%, down 1.90PCT from the previous year. The net interest rate for 23Q1 was 5.4%, an increase of 1.85 PCT over the previous year.
Follow the progress of inventory removal. Accounts receivable/inventory amounts in '22 were $374/351 million, respectively, up -23%/27% year-on-year. The accounts receivable/inventory turnover days were 136/205 days, respectively, an increase of 14/70 days over the previous year. The amount of accounts receivable/inventory in 23Q1 was $264/398 million, respectively, an increase of -44%/34%. The number of accounts receivable/inventory turnover days was 119/272 days, respectively, an increase of -84/47 days over the previous year.
Investment advice
According to our analysis, (1) The company's main business has followed the market recovery since the beginning of the year. After the company hired a new spokesperson, Liu Haoran, last year, the pace of product development accelerated, and there is still room for improvement in future store efficiency and discounts. (2) Looking at the display chip business, the application of miniLEDs in the fields of laptops, tablets, TVs, e-sports, especially automotive, is accelerating. Laptop Q1 has already recovered. It is expected that the consumer electronics industry will recover in the second half of the year. The acquisition of G2Touch is expected to complete the product line and form collaboration with Core Energy.
The 23/24 revenue forecast was lowered to 1,784/2,287 million yuan to 13.46/1,565 million yuan, the 25-year revenue forecast was increased by 1,888 million yuan, the 23/24 net profit forecast was adjusted to 121/210 million yuan to 122/163 million yuan, the 25-year net profit forecast was added 194 million yuan, the corresponding adjustment EPS of 0.14/0.24 yuan to 0.14/0.18 yuan, the 25-year EPS was 0.22 yuan, closing on April 28, 2023 The price of 8.53 yuan corresponds to the 23/24/25 PE of 62/46/39X respectively, maintaining the “buy” rating.
Risk warning
Uncertainty about the development of the epidemic, uncertainty about the performance of acquisition targets, sustainability of camping, systemic risks.