23Q3 revenue fell-47.8% year-on-year, and home net profit fell 89.3% year-on-year. Downgraded to the three-quarter report released by overweight rating companies on the 27th, 23Q3 revenue fell by 47.8% year-on-year, and home net profit fell by 89.3% year-on-year, of which the net profit performance was lower than our previous expectation of a 50-60% decline. The company has entered a stage of deep adjustment, with a total of 19 new stores and 113 stores closed in the first three quarters, which is still affected by weak wedding demand and sluggish diamond sales in the short term. Considering the store adjustment, we lowered the 23-25 net profit to 1.1,5.5,680 million yuan (the previous value is 5.7,7.3,8.7). Considering that the 23-year store adjustment is relatively large and the profit is not comparable, we refer to the Wind comparable company's 24-year consensus forecast 12.2xPE, considering that the diamond brand industry has entered the stage of survival of the fittest, and the clearing share of the Dia beneficiary industry is expected to increase. At the same time, considering that the company is rich in cash (as of 23Q3 currency and trading financial assets totaling more than 5 billion yuan), we give the company a 24-year 25xPE with a target price of 34.25 yuan (the previous value is 43.20 yuan), downgraded to overweight rating.
Both online and offline business revenue declined significantly, resulting in a significant increase in the expense rate Q1-Q3, the company's online proprietary business revenue fell 44.3% compared with the same period last year, and offline proprietary business / joint venture business revenue decreased by 42.4% and 38.2% respectively compared with the same period last year, mainly affected by the decline in the diamond boom and the company's own shop closure.
Income is under pressure, although the company's sales expenses Q3 month-on-month decline, management expenses Q3-month ratio is basically the same, but compared with the same period last year, the company sales expense rate and management expense rate increased by 11.9pct and 2.2pct respectively.
In the medium and long term, the channel adjustment of the company is more beneficial to the development.
The company closed a total of 94 stores in the first three quarters. As of 23Q3, the company has 594 stores, including 374 in first-and second-tier cities and 218 in third-tier and below cities. The diamond sales boom is under great pressure, which may be difficult to reverse in the short term, and the asset impairment loss caused by the company's closure is expected to be released in the first three quarters. At the same time, in the medium to long term, the cleaning of inefficient stores is also more beneficial to the company's long-term development in the future.
Short-term profits are under pressure, and the share of medium-and long-term diamond ornaments is expected to continue to increase.
The company's short-term profits are under great pressure, but thanks to industry clearing, market share is expected to rise against the trend.
We estimate that the company's 23-25 return net profit will be 1.1,5.5 and 680 million yuan. Considering that the 23-year store adjustment is relatively large and the profit is not comparable, we refer to the Wind comparable company's 24-year consensus forecast 12.2xPE, considering that the diamond brand industry has entered the stage of survival of the fittest and the clearing share of the Dia beneficiary industry is expected to increase. At the same time, considering that the company is rich in cash (as of 23Q3 currency and trading financial assets totaling more than 5 billion yuan), we give the company a 24-year 25xPE with a target price of 34.25 yuan, downgraded to an overweight rating.
Risk tips: macroeconomic growth slows, diamond boom continues to decline, and corporate channels are adjusted.