The demand is squeezed and the revenue decreases as well, and the individual store optimizes to calculate the impairment of assets.
The company expects 23Q2 revenue of 5.21-539 million yuan, a decrease of 38% MUE 40%, a net profit loss of 0.46%-57 million RMB, a decrease of 123% RMB129%, and a net profit loss of RMB 0.98-113 million, a decrease of 166% Mui 176%.
It is estimated that the revenue of 23H1 is 12.26-1.244 billion yuan, with a decrease of 40% muri 41%; the net profit of returning mother is 0.43-54 million yuan, with a decrease of 91% RMB93%; and deducting the loss of non-net profit of RMB 0.47-63 million, with a decrease of 110% Mui 113%. It is expected that the non-recurrent gains and losses are mainly the changes in the fair value of transactional financial assets and the investment income generated by wealth management products.
In the first half of 2023, the average unit price of the company remained basically stable compared with the first half of last year, and the decline in revenue was mainly due to the decline in the number of customers who bought products.
Revenue is mainly reduced: 1) in the first half of the year, the foundation of domestic economic recovery is not solid, optional consumption growth is weak, and the demand of diamond mosaic market is still insufficient in the short term; 2) the demand for gold has increased significantly, squeezing diamond mosaic products. Diamond mosaic industry shows a cyclical adjustment; 3) 22 years of strategic expansion, the number of stores has increased significantly, but brand potential, brand image, channel operation capacity still need to be greatly improved.
The decrease of homing net profit is mainly due to: 1) the sharp expansion of stores leads to an increase in related sales expenses, such as store rent, personnel costs and other rigid expenses. 2) the company takes the initiative to adjust its business strategy, promote the brand upgrading strategy, improve the potential energy and service experience of offline stores, and optimize some low-potential stores according to the operating conditions of each store. and carry on the impairment test to the stores that show signs of impairment at present, it is estimated that the asset impairment loss is 4200 to 63 million yuan.
The revenue from store expansion falls short of expectations, and the future will focus on the improvement of individual stores.
By the end of June 2023, the number of stores in the company had reached 676, of which 417 had opened before 2022, accounting for 61.69%. In the case of the rapid expansion of store scale in 2022, the income of some stores in the same city has a certain diversion impact. The company also has a lot of room for improvement in brand potential, brand image and channel operation capacity. Due to the impact of the external macro environment and the gold product market on the diamond mosaic market, the overall sales of mosaic jewelry declined, and there was a large turnover of staff in stores in the first half of 2023, resulting in a large decline in revenue in stock stores.
In the future, we will create a channel network that matches the company's brand, optimize channel layout and create high-potential stores.
Focus on the operation of the core business district, optimize the allocation of resources with superior personnel, goods and flow, and create high-potential stores. According to the location, economy, population size and business area of the city where the store is located, the existing inventory stores are divided into three levels: high potential energy, medium potential energy and low potential energy, and continue to improve the efficiency of high potential energy and medium potential energy shops. close the last low potential store.
The cost of marriage continues to grow, waiting for the diamond category to be repaired.
According to the data of de Beers and the World Bank, the per capita diamond jewelry demand in China in 2021 is US $7 per person, which is a big gap compared with US $142 per person in the United States and US $40 per person in Japan. At the same time, the average cost of marriage in China continues to grow, with China's middle-income groups continue to expand, per capita disposable income growth, diamond consumption penetration is expected to continue to increase.
Adjust earnings forecast and maintain buy rating
The company is committed to creating a world-famous diamond ring brand, the brand concept is deeply rooted in the hearts of the people; fully proprietary model to expand and deepen offline channels, enhance the coverage of cities and business areas; actively promote brand upgrading strategy, optimize low-potential stores, and improve the performance of single stores. Due to the decline in 23H1 performance, expected store adjustment, sluggish optional consumption growth and other factors, we adjust our profit forecast. It is estimated that the company's return net profit for 23-25 years will be 3.3 shock 5.1 / 630 million (the original value is 8.1 shock 9.3 / 1.08 billion) and EPS is 0.8max 1.3max per share (the original value is 2.0max 2.32.7 per share respectively). The PE is 45, 29 and 23x, respectively.
Risk hints: decline in brand influence, pressure on revenue per store, outsourcing production, fluctuations in economic and market environment, etc.; now it is only a performance forecast, and the specific data shall prevail in the 23-half annual report released by the company.