Introduction to this report:
Chiikawa's new name is imminent, and IP-enabled sales are expected to be significantly boosted; domestic consumption is recovering, overseas store expansion is accelerating, direct business continues to increase, and there is still plenty of room for an increase in IP sales. The IP Design and Retail Group is worth looking forward to.
Summary:
Maintain an “Overweight” rating. The company maintains an estimated 2024-2026 revenue of 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.
Incident brief: The company released new co-branded products such as the Chiikawa series of plush dolls, hair ties, U-shaped pillows, handbags, and pendants, which are scheduled to debut nationwide from March 29 to April 21 at the Joy City pop-up store in Jing'an, Shanghai.
Chiik awa is about to launch a new joint name, and IP sales can be expected to be boosted. The comic image created by Chiikawa for Japanese manga artist Nagano was successfully animated in 2020; with her cute healing image and unique sense of humor, it attracted a large number of fans and became an emerging Japanese national IP. According to data from Xiaohongshu over the past 180 days, Chiikawa's topic views soared from 14 million to 800 million+, an increase of 4652.88% over the previous year, and the trending topics list continued for weeks. Mingchuang Premium plans to launch the Chiikawa co-branded product nationwide on March 29. We expect the company to enjoy scarce market dividends for IP co-branded products within a certain period of time. It is expected to replicate the sales performance of Barbie and Loopy series terminals in 2023, support same-store sales growth stronger than the customer flow performance in the business district, further boost franchisees' willingness to open stores and agents to pick up goods, and drive continued growth and release of performance.
There is still plenty of room for an increase in the share of IP sales, and IP Design Retail Group is worth looking forward to. Based on:
① The strategy of major domestic stores continues to advance, and stores in high-tier cities continue to expand, which is expected to drive a continuous increase in the share of IP sales; ② Driven by direct management in overseas markets, operating leverage will gradually be released as the product portfolio is optimized and the share of IP sales increases; ③ it is expected that the company's overall gross margin will increase further, and with the further release of overseas direct business store efficiency, there is still plenty of room for optimization, and the overall profit side can be expected to be boosted.
Risk warning: Competition in the industry intensifies; the risk of store expansion and store efficiency falling short of expectations.