Event description
The company disclosed that in the first half of 2023, the company realized operating income of 1.242 billion yuan, down 40.45% from the same period last year, realized net profit of 53.4111 million yuan, down 90.77% from the same period last year, and realized attribution deduction of non-net profit of-49.3612 million yuan, down 110.07% from the same period last year.
Event comment
The decline in optional consumption growth and the decline in diamond consumption led to a decline in revenue, and cost rigidity put pressure on the operating profit phase.
The company's revenue fell 40.45% in the first half of the year compared with the same period last year, corresponding to a 42.27% and 37.88% drop in Q1/Q2 quarterly revenue, mainly because consumer confidence is still recovering, optional consumption growth is still weak, while the company category is still dominated by diamonds, while the company opened 15 new stores in the first half of the year, closed 27 stores, and reduced a net 12 stores. In the first half of the year, the company's gross profit margin fell 1.33 percentage points year-on-year to 69.29%, of which Q1/Q2 fell 1.25% and 1.39% respectively compared with the same period last year, or mainly because the consumer side is still recovering, the market strategy is relatively positive. On the expense side, the company's Q1/Q2 sales expense rate increased by 21.16% and 27.02% respectively compared with the same period last year, mainly because the company is self-employed. The substantial expansion of store size leads to relatively rigid expenditure such as store rent and personnel costs. At the same time, in order to maintain a healthier cash flow and brand image for the long-term development of the brand, the company optimizes some low-potential stores. During the reporting period, the impairment loss of assets of stores with signs of impairment was calculated to be 55.274 million yuan. The company's Q1/Q2 management expense rate increased by 3.06% and 1.82% respectively compared with the same period last year, mainly due to the relative rigidity of the basic background operating expenses. Overall, the company's operating profit in the second quarter (gross profit-business tax and additional-sales expenses-management expenses-R & D expenses-financial expenses) was-59.3469 million yuan, a decrease of 241 million yuan compared with the same period last year.
The company insists on brand building, continues to enhance brand influence, and actively increases product development, which is conducive to medium-term sustainable growth. Based on the emotional proposition of "loving one person with one life", the company filmed the brand true love blockbuster "Love never changed" in the United States, and launched it on Valentine's Day. The power of true love is transmitted around the world. During the 520 period, the company launched a "courtship season" around the needs of users' love expression and rituality. it has meticulously created a marriage proposal resort in many cities and spread the true love culture of "loving someone for a lifetime". Fully demonstrated the value of the brand. On this basis, the company actively increased product development. During the reporting period, the company successfully obtained 71 product patents, including 54 appearance patents, 3 utility model patents, 13 EU design patents and 1 German utility model patent. At the same time, the company extended the gold series products, combining the Chinese romance of gold "love than gold" with the brand concept, and developed the collection gold series product "DR Little Golden Heart". "DR Little Golden Heart", etc., the company cooperates with Cheng Shumei, the master of arts and crafts, who oversees the production of the gold suite of non-legacy craftsmanship, and the product series has to be extended to lay the foundation for the company to open incremental demand and build momentum for the company's medium-term growth.
Investment suggestion: the company accurately grasps the attribute of diamond jewelry as an emotional carrier, deeply binds the loyalty of love with its own brand products, and on this basis, gives full play to its own strong marketing and operation experience. the use of online new media publicity effectiveness to expand brand awareness and consumer access, and self-operated stores + custom pre-sale mode to achieve better service experience and faster commodity turnover. In order to create a strong brand premium power and efficient operating efficiency, so as to ensure that the company rapidly expand the market and maintain rapid growth. Looking to the future, based on the steady increase in profitability brought about by the brand strength and the rapid increase in the scale brought about by the stable expansion of stores, the company is expected to have a net profit of 164 million yuan, 446 million yuan and 654 million yuan in 2023-2025, with a "buy" rating.
Risk hint
1, the residents' willingness to spend is weak, the demand for diamonds and other categories is low; 2, the marriage logarithm in China has further dropped sharply.