Key points of investment:
The company released its 2023 annual report, and the results were in line with expectations. According to the company's announcement, 1) In 2023, the company achieved operating income of 12.086 billion yuan, a year-on-year decrease of 0.32%; realized net profit of 227 million yuan, achieved a year-on-year increase of 120 million yuan, an increase of 88.75% over the same period last year, deducted non-net profit of 128 million yuan, and lost -188 million yuan for the same period last year, turning a year-on-year loss into a profit. 2) 23Q4 achieved revenue of 2,835 billion yuan, a year-on-year decrease of 2.34%, and achieved net profit of 2.04 million yuan, a year-on-year decrease of 62.7%; non-net profit withheld from mother - 7.15 million yuan, a year-on-year loss of 3.2 million yuan; 3) By the end of '23, the company had operated 100 stores in the shopping industry (including 5 franchises, management and export companies), 116 supermarket stores (including 29 independent supermarkets), and had signed a total of 9 reserve projects to be opened, including 7 shopping malls and 2 independent supermarkets. First closed Five stores, with a total area of about 4.57 million square meters, covering 34 cities in 7 provinces.
Deeply link the global consumption scenario and promote the integration and upgrading of multiple business formats in an integrated manner. According to the company's announcement, in '22, the company achieved retail revenue of 11.731 billion yuan, an increase of 0.38% over the previous year; comparable stores achieved revenue of 11.248 billion yuan, an increase of 0.45% over the previous year. By business type, comparable stores in the supermarket business achieved revenue of 7.126 billion yuan, a year-on-year decrease of 4.01%, mainly due to the impact of last year's high base and changes and adjustments during the year; comparable stores in the shopping 100 business category achieved revenue of 4.122 billion yuan, an increase of 11.71% over the previous year. The company grasped the major trend of consumer recovery, clasped on major marketing points, and launched a new “517 Food Festival” IP. The joint IP “Bears Came” to create Tianhong's “Fun Festival”. During the event, shopping center traffic increased by 34% and 28%, respectively. At the same time, the company coordinated national marketing and continued to promote online business development. Online product sales and digital service revenue was about 5.44 billion yuan, down 4.56% year on year, the number of digital members exceeded 47 million, up 11.9% year on year, and monthly active app and applet members exceeded 4 million; in '23, supermarket home sales increased 2.3% year on year, accounting for 23.2% of sales. Among them, third-party platform sales grew rapidly, accounting for nearly 17.8% of sales. The company continues to explore public domain platforms, and has achieved GMV exceeding 1 billion yuan in ticketing sales on local lifestyle platforms such as Meituan and Douyin throughout the year.
Deeply refine operations and take more measures to upgrade the cost management model. According to the company's announcement, in '23, the company achieved a comprehensive gross profit margin of 38.26%, +1.46pct year on year, and a comprehensive gross profit margin of 36.68% for the retail industry, +1.95pct year on year. By business type, the gross profit margin of the supermarket business was 23.55% compared to the previous year, -0.32pct. The total profit from buying Baike Store increased by 225.3% and 10.1%, respectively, over the same period last year. The company continuously optimizes the cost structure, adopts various forms of flexible employment, and actively promotes changes in store cooperation models and cost optimization. 23 The cost rate for the whole year was 37.04%, -0.74pct year on year, and the sales/management/R&D/finance cost ratio was +0.22/+0.12/-0.07/-1.00/pct year on year. R&D comprehensively promoted the digitization of management, made full use of AI and big data capabilities to comprehensively improve organizational efficiency, and promote the integrated development of “AI+ retail” in Tianhong Ecology.
Increase shareholder returns, and the dividend ratio for 23 years reached 82.5%. According to the company's announcement, in 2023, the company expects to distribute a cash dividend of 1.6 yuan per 10 shares to all shareholders, with a total cash dividend distribution of 187 million yuan, an increase of 220% year-on-year over 58.44 million yuan in '22. The dividend ratio will reach 82.5%, increasing shareholder returns.
Maintain a “buy” rating. Since 23 years, the offline retail industry has shown a steady recovery trend. Tianhong has grasped major marketing nodes, developed online and upgraded the business format, and continued to consolidate its position as a leading localized consumer service platform. We are optimistic that the company's digital technology will continue to enable the iterative upgrading of the digital retail business, optimize the store cooperation model and operating capacity, and guarantee consumer demand. We maintain the company's net profit to mother of 28,289 million yuan for 24-25, respectively, and add a profit forecast for 26 years. The estimated net profit for 26 is 306 million yuan, corresponding to PE of 23/20/19 times, maintaining a “buy” rating.
Risk warning: Consumption recovery falls short of expectations, digital construction costs exceed expectations, and store adjustments fall short of expectations.