Key points of investment
The company released its annual report for the year 23, and annual revenue/net profit to mother +27.9%/33.3% to US$36.8/420 million. Performance flexibility was prominent under the travel fever; single Q4 revenue/net profit attributable to mother +15.9%/-37.4% to US$95/150 million. The differentiation in profit performance was mainly due to income tax impacts.
Travel revenue growth in Asia is impressive. Profitability is leading by region. Revenue from Asia, North America, Europe, and Latin America was +55.8%/+13.4%/+15.0%/+24.1% to US$14.3/12.7/7.8/210 million in 23 years; adjusted EBITDA profit margins were +5.8pct/+1pct/+0.7pct/1.4pct to 23.8%/20.4%/11.7%/13.9%. Asia's revenue performance exceeded expectations mainly from China in 23/ Revenue from India, Japan, and South Korea respectively was +78.7%/19.3%/56.3%/49.3% to US$3.0/2.6/1.9/160 million. China led the world in regional revenue growth after full liberalization of travel.
The luxury brand TUMI brand's momentum continues to improve. Looking at brands with excellent performance, Samsonite, TUMI, and US travel revenue in '23 was +28%/+34.3%/+26% to $18.5/88/650 million US dollars. TUMI's potential as a luxury brand increased and occupied consumer minds with high-performance products. In '23, TUMI was +62.2%/22.4%/32.0%/87.7% in Asia/North America/Europe/Latin America, respectively. dollars.
Continued improvement in store effectiveness+new store openings drive impressive DTC growth
By channel, DTC retail/wholesale/DTC e-commerce increased by 32.3%/25.3%/32.2% respectively to US$10.4/22.5/40 billion in 23 years. DTC's leading retail growth rate was mainly driven by single-store efficiency. In '23, it benefited from restarting store renovation and upgrading, with single-store efficiency +23.9% to US$984 million; at the end of '23, the number of direct-run stores reached 1,052, a net increase of 67 (including Samsonite +44 and TUMI+23).
Profitability has increased significantly, and investment in publicity has been increased to promote sales
Gross margin was +3.5pct to 59.3% year-on-year. On the one hand, the growth of high-end brands TUMI and the Asian region with higher profit margins led to a structural increase in gross margin; on the other hand, the company increased ASP by upgrading products+controlling discounts, strictly controlling procurement costs, and increasing gross profit margin.
The 23-year distribution expense ratio, marketing expense ratio, and financial expense ratio were -0.1 pct/+1.1 pct/-0.9pct/-0.2 pct to 27.9%/6.6%/6.8%/4.3%, respectively. The company actively increased advertising and marketing campaigns to promote sales under the travel craze. The decline in other expenses reflected positive operating leverage; the adjusted EBITDA profit margin/net profit margin was +2.9pct/0.5pct to 19.3%/11.3%, respectively. Maternal net interest rates were +3.4 pct/ -13.4 pct to 59.9%/15.7%, respectively, and gross margin reached a record high. The decline in net interest rate in single Q4 was mainly due to income tax differences. The 22Q4 income tax subsidy was 25.7 million US dollars, 23Q4 income tax was 52.4 million US dollars, and the corresponding income tax rate was 25.2%.
Profit forecasting and valuation
The company is expected to achieve revenue of 41/45/5 billion US dollars in 24-26, +11.8%/9.7%/9.9%, respectively, and net profit to mother of 4.8/5.3/590 million US dollars, +15.5%/9.9%/10.6% year-on-year, respectively. As of March 15, the PE corresponding to the closing price is 12/11/10 times. Considering that TUMI's brand potential continues to rise in Asia and Europe, the company upgraded product prices+controlled discounts to drive a continuous increase in gross margin, reduce costs and increase efficiency to increase operating leverage, continue to upgrade stores, expand channels, and increase advertising for 24 years to further drive performance growth, and maintain a “buy” rating
Risk warning
Global travel demand slows; same-store growth falls short of expectations; store expansion falls short of expectations