Incidents:
The company announced FY24Q2 (CY23Q4) results. In the current period, the company achieved revenue of 3.84 billion yuan, up 54.0%/1.3% year over year; gross margin was 43.1%, up 3.2 pct/q pct year over month, respectively; corresponding adjusted net profit was 660 million yuan, a record high, and the adjusted net profit margin reached 17.2%, which also reached a record high.
CY23Q4 performed brilliantly, ending 2023 perfectly
CY23Q4's business indicators reached record highs. Its revenue set a new single-quarter record, gross margin continued to rise, and the adjusted net profit margin also reached a record high, putting a perfect end to 2023. Looking at the spin-off, the company's strong revenue growth was due to a 56%/86%/26% year-on-year increase in revenue from mainland China/overseas direct-management/overseas agents. The driving force behind this growth mainly comes from the increase in single-store store efficiency. The continued increase in gross margin was mainly driven by overseas, reflecting the success of the company's IP strategy, brand upgrade strategy, and globalization. The increase in net interest rate was weaker than that of gross margin, mainly due to expenses brought about by business development and the opening of direct-run stores, but the trend of increasing net interest rates still reflects the company's strategic success and cost management effectiveness.
Continue strong domestic store expansion and accelerate overseas network expansion
In 2023, MINISO achieved a net increase of 601 stores in China, including a net increase of 124 domestic famous and premium stores in 23Q4, continuing the strong trend of opening stores; moreover, the selection of locations paid more attention to quality. Nearly 70% of the net increase in 23Q4 stores came from Tier 1-2 cities. Looking ahead to 2024, the company expects a net increase of 350-450 stores in China, continuing high-quality development and refined operations. In 2023, the company had a net increase of 372 overseas stores, achieving the goal of opening stores at the beginning of the year; in 23Q4, the net increase of 174 stores in overseas markets was the highest number of overseas stores opened in a single quarter since 2019. In 2024, the company expects a net increase of 550-650 stores overseas. In terms of layout, it is expected that Asia and Latin America will still contribute the vast majority of stores, and the European and North American markets are expected to open quickly.
Profit Forecasts, Valuations, and Ratings
We expect the company's FY2024-2026 revenue to be 153.4/192.0/23.22 billion yuan, respectively, with year-on-year growth rates of 33.7%/25.1%/20.9%, respectively, net profit to mother 26.1/32.7/3.95 billion yuan, 47.5%/25.1%/21.1% year-on-year growth respectively, and EPS 2.1/2.6/3.1 yuan/share, respectively. In view of the company's product innovation, cost performance advantages and continued progress in its global strategy, based on comparable company valuations, we gave the company 20 times PE for fiscal year 2024, with a target price of HK$44.96 (exchange rate: RMB 1 = HK$1.09), maintaining the “gain” rating.
Risk warning: consumer spending power is under pressure; market competition is intensifying; overseas market development falls short of expectations; overseas tariff risks, etc.