Introduction to this report:
2023Q4 has benefited from both domestic recovery and overseas store expansion strategies, and its performance has exceeded expectations; domestic consumption is recovering strongly, overseas store expansion is accelerating, and direct business continues to increase, so it is worth looking forward to boosting profits.
Summary:
The performance exceeded expectations, and the rating was “increased”. The company's fiscal year settlement date was changed from June 30 to December 31. It is estimated that the company's 2024-2026 revenue will be 173.56/209.80/25.101 billion yuan, respectively, and adjusted net profit of 28.69/34.57/4.136 billion yuan, respectively. Considering that domestic store expansion is expected to be matched and released, the overseas accelerated expansion of stores is being promoted and there is room for growth. 24.1xPE will be given in 2024, maintaining a target price of HK$60.30, and a “gain in weight” rating.
Performance summary: 2023Q4 achieved revenue of 3.841 billion yuan/yoy +54.0%, including overseas revenue of 1,494 billion yuan/yoy +51.4%, domestic revenue of 2,347 billion yuan/yoy +55.7%; adjusted net profit of 661 million yuan/yoy +77.0%.
Performance exceeded expectations, high growth in direct management unleashed operating leverage, and gross margin reached a new high. 2023Q4 adjusted net profit of 661 million/yoy +77.0%, net interest rate 17.2% /yoy+2.2pct, adjusted net interest rate of 17.4% /yoy+2.5pct, +0.3 pct month-on-month; gross margin increased steadily from 35.7% in 2023Q3 to 43.1% in 2023Q4, up 3.1 pct year on year and 1.3 pct month-on-month, a record high. The performance exceeded expectations, mainly due to: ① the high-margin direct market contributed more than half of the 2023Q4 overseas business, and the overseas revenue contribution increased by 4.7 pct compared to 2023Q3; ② TOPTOY's revenue contribution increased, benefiting from the increase in the share of high-margin products, driving TOP TOPTOY's gross margin increase; ③ the gradual advancement of overseas market IP strategies, and core capabilities of IP product R&D, supply chain integration and globalization will drive a steady increase in gross margin.
Domestic consumption is recovering, and overseas store expansion is speeding up. ① Benefiting from the rapid recovery in domestic consumption, franchisee confidence has picked up significantly, and the expansion of stores has exceeded expectations. In a single quarter of 2023Q4, there was a net increase of 124 domestic stores, a net increase of 174 overseas stores, and a net increase of 26 TOPTOY; in 2023, the cumulative net opening of 973 stores was 973, of which Miniso had a net increase of 601 domestic, 372 overseas stores, and a net increase of 31 TOPTOY stores.
The domestic market achieved the target of a net increase of 450-650 for the whole year, and overseas achieved the target of a net increase of 350-450 for the whole year; ② Driven by the combined IP strategy layout during the peak retail season, the overseas direct business continued to achieve more than 80% for three quarters. For the first time, 2023Q4 contributed more than half of overseas business revenue and released operating leverage, which led to a further significant increase in profitability. 2023Q4
Risk warning: Competition in the industry intensifies; sub-brand development falls short of expected risks.