The company's 2023 revenue increased 3.10% year on year, and net profit to mother increased 45.59% year on March 21. On March 21, the company announced its 2023 annual report: achieved operating income of 6.065 billion yuan, up 3.10% year on year, and realized net profit of 136 million yuan in 2023, equivalent to fully diluted EPS of 0.60 yuan, an increase of 45.59% year on year, achieving net profit deducted from non-return mother of 118 million yuan, an increase of 490.74% year on year.
Looking at the single-quarter split, 4Q2023 achieved operating income of 1,415 billion yuan, up 7.89% year on year, achieving net profit of 0.2 billion yuan (-027 billion yuan in the same period last year, loss amount narrowed year on year), converted into fully diluted EPS of -0.01 yuan, achieving net profit without deduction of -0.07 billion yuan, compared to -0.2 billion yuan for the same period last year, and the loss amount narrowed year-on-year.
The company's comprehensive gross margin increased by 1.46 percentage points in 2023, and the cost ratio decreased by 0.73 percentage points during the period. The company's comprehensive gross margin in 2023 was 26.76%, up 1.46 percentage points from the previous year. Looking at the single-quarter split, the 4Q2023 company's comprehensive gross margin was 25.25%, up 4.11 percentage points from the previous year.
The company's expense ratio for the 2023 period was 23.82%, down 0.73 percentage points year on year. Among them, sales/management/finance expense ratios were 17.34%/3.36%/3.12%, respectively, changing -0.46/ +0.01/ -0.29 percentage points year-on-year, respectively. The 4Q2023 company's expense ratio for the period was 26.17%, up 1.38 percentage points from the previous year. Among them, the sales/management/finance expenses ratio was 18.41%/3.87%/3.89%, respectively, with a year-on-year change of +0.72/+0.56/ +0.09 percentage points, respectively.
Department store brands were upgraded and adjusted, and the offline and online channels of the electrical appliance business were successfully expanded by the end of 2023. The company had a total of 344 stores, including 12 department stores and shopping centers, 243 supermarkets, and 89 electrical appliances and communications. In terms of department stores, the company introduced a total of 103 first-store brands in 2023. Each store adjusted and introduced 307 new brands, moved and upgraded 123 brands, and replaced 161 brands. In terms of supermarkets, the company opened 37 new supermarkets in 2023, including 7 large stores and 30 super convenient supermarkets. In terms of electrical appliances, in 2023, the company sank its channels to expand 30 franchise stores, and expand 8 online home appliance stores, including the JD Platform Xinbai flagship store, the Whole House Home Appliance JD Self-operated Zone, and the Pinduoduo Xinbai Franchise Store.
Raise profit forecasts and maintain the “increase in holdings” rating
The company's performance exceeded our previous expectations, mainly due to the increase in the company's gross margin and the year-on-year decline in the company's profitability. We believe that there is still some room for improvement in the company's profitability, raising the company's 2024/2025 EPS forecast by 14%/13% to 0.69/0.76 yuan, and adding 0.83 yuan to the company's 2026 EPS forecast. The company has a certain competitive position in the Ningxia region, has strong synergy between multiple business formats, and maintains a “gain” rating.
Risk warning: Regional competitive advantage has been impacted, and the post-economic cycle affects consumer demand.