The company released its semi-annual report for 2023. 23H1 achieved operating income of 71 million yuan/ -18.7%; net profit due to mother of 157 million yuan, loss of 304 million yuan for the same period last year; adjusted net profit of 177 million yuan, loss of 100 million yuan for the same period last year. The adjusted net interest rate was 25.0%, and the same period last year was -11.4%. Among these adjustments were pub optimization and adjustment losses of 19.7 million yuan. According to the results announcement, revenue was 70-120 million yuan, and adjusted net profit was 170 to 180 million yuan, which is in line with the profit forecast.
Stores: The pub network was optimized and iterated in the first half of the year, with 25 new pubs opened and 139 closed; same-store performance was stable compared to the same period last year, same-store daily sales increased 0.1% year-on-year, overall single-store performance recovered significantly, and the average daily turnover of a single store increased 13.9% year-on-year to 0.82 million yuan.
1) In terms of store openings: 23H1, 114 stores (25 new stores opened, 139 closed), as of June 30 this year, the total number of stores decreased to 653, of which 17/58/40 were cleared for first-tier, second-tier, third-tier and lower respectively; as of August 25 this year, the total number of stores was 562, and 91 were cleared since July, including 7/46/38 first-tier, second-tier and third-tier stores. Continuously explore franchise cooperation models and adjust and optimize directly-managed pubs. As of June 30 this year, the total number of directly managed pubs was 515/ -39%, and the total number of franchised taverns was 138; “Hi Beer Partner” was officially launched in June this year
The plan is to launch a new cooperation model and single-store type. As of August 25, more than 80 partners have signed contracts, of which 11 pubs have already been opened.
The main reasons for this store adjustment are: ① there is uncertainty about changes in the economic environment after the epidemic, and the existing pub network has been optimized and iterated; ② Company development strategy adjustments - transformation from a linear chain model to a platform-based company, exploring franchise cooperation models, and greatly increasing the proportion of franchised bars.
2) Store performance: ① Overall average daily turnover of a single store: 23H1 The average daily turnover of a single store was 0.82 million yuan/ +14%, down from the average daily turnover of 90,000 in Q1. Among them, first-tier, second-tier, third-tier stores and below had an average daily turnover of 0.84, 0.83, 0.79 million yuan, +15%/+26% /same.
According to the type of store, the average daily turnover of a single store is mainly driven by franchise taverns. 23H1 directly-managed taverns have an average daily turnover of 0.79 million yuan/ +10%, and franchised partner taverns reach 90,000 yuan. ② Same-store performance (188 stores): 23H1 same-store sales increased 9.1% year-on-year, mainly due to an increase in business days combined with a 0.1% increase in daily same-store sales. ③ New store performance: The average daily floor efficiency of newly opened Hibeer partner stores is about 2.6 times that of newly opened stores in 2023H1.
Gross profit side: Decrease in promotional activities+increase in the share of owned alcohol with higher gross margin. 23H1's gross margin reached 72.3% /+6.3 pct. Among them, self-owned alcohol/third-party alcohol/franchise income/own snacks and other revenue accounted for 56.4%/16.9%/5.5%/21.2%, year-on-year -1.5/-3.5/+5.4/-3.4 pct, while the gross margin of owned alcohol/third-party alcoholic beverages was about 79.4%/55.6%, +0.7/+7.1 pct.
Cost side: Staff costs and rent costs have been significantly reduced. 1) 23H1's employee cost ratio was 23.9% /-19.6pct, mainly due to the fact that 23H1's share payments settled in equity were 0, and the number of employees at the company's refined management order store dropped further from 10 in 22H1 to 6 in 23H1. 2) The company's rent cost ratio (depreciation of usage rights assets+short-term rental expenses) is 14.2% /-8.6pct. This is mainly due to the company terminating a number of tavern leasing contracts under the optimization and adjustment of the pub network. Combined with the decline in the number of employees, the number of leased short-term employee dormitories has been reduced.
Profit prediction and investment advice: The company is actively seeking change, starting the transformation of the new affiliate model to be asset-light, looking forward to further replication of the company's supply chain and comprehensive capabilities in the vast space of the sinking market, and following further confirmation of new business format exploration and fundamental trends. We expect the company's net profit to be 3.5/43/5.3 billion yuan from 2023-2025. The current stock price corresponds to PE28/23/18X and maintains the “recommended” rating.
Risk warning: store sales recovery falls short of expectations, franchise expansion process falls short of expectations, industry competition intensifies, etc.