The company's revenue for 2023 decreased by 18.55% year-on-year, achieving net profit to mother of -216 million yuan. On March 28, the company announced its 2023 annual report: achieved operating income of 11.515 billion yuan in 2023, a year-on-year decrease of 18.55%, and realized net profit to the mother of -216 billion yuan (559 million yuan in the same period of the previous year, turned profit into loss), converted to fully diluted EPS of -0.51 yuan, and realized net profit of 1,228 million yuan, compared with 595 million yuan for the same period last year. In 2023, the company's credit impairment and asset impairment losses totaled 1,887 million yuan, and losses from changes in the fair value of investment real estate were 842 million yuan.
Looking at the single-quarter split, 4Q2023 achieved operating income of 2,840 billion yuan, a year-on-year decrease of 22.30%, and realized net profit of 1.67 billion yuan (-759 million yuan in the same period of the previous year, loss amount increased year-on-year), which translates into fully diluted EPS of -0.38 yuan, achieving net profit without deduction of 893 million yuan.
The company's comprehensive gross margin decreased by 1.42 percentage points in 2023, and the cost ratio increased by 8.86 percentage points during the period. The company's comprehensive gross margin in 2023 was 56.74%, down 1.42 percentage points from the previous year. Looking at the single-quarter split, the consolidated gross margin of 4Q2023 was 52.74%, up 0.38 percentage points from the previous year.
The company's expense ratio for the 2023 period was 46.60%, up 8.86 percentage points year-on-year. Among them, sales/management/finance/R&D expenses were 12.88%/11.31%/22.24%/0.17%, respectively, with year-on-year changes of +1.88/+1.33/+5.81/-0.16 percentage points, respectively. The 4Q2023 company's expense ratio for the period was 45.79%, up 4.40 percentage points year on year. Among them, sales/management/finance/R&D expenses were 12.76%/8.80%/24.03%/0.21%, respectively, with year-on-year changes of -1.31/ -3.09/ +8.92/-0.12 percentage points, respectively.
Introduce new automotive business formats and continue to promote online transformation
In July 2023, the company reached a strategic cooperation with Shanghai Carnage Auto Service Co., Ltd. and other parties to combine the automobile category with the household category to test the waters of a new “one-stop home purchase” business from home improvement to home appliances, automobiles, etc. The company continues to introduce catering categories, and the catering coverage rate in the company's shopping malls increased from 43% to 54% in 2023. On the online side, by the end of 2023, the company's 295 core shopping malls had been digitally upgraded.
Lower profit forecasts and maintain the “increase in holdings” rating
The company's performance fell short of our previous expectations, mainly due to the company's credit/asset impairment losses and losses from changes in the fair value of investment real estate, which had a certain adverse impact on the company's profits. Considering that there is still some uncertainty about the future development of the real estate-related industry chain, we lowered our 2024/2025 EPS forecast of 6%/9% to 0.08/0.09 yuan, and added 0.10 yuan for the company's 2026 EPS forecast. The company introduced a new automobile business format, promoted asset-light and online transformation, and maintained the company's A share and H share “gain” ratings.
Risk warning: The expansion of stores and rent increases did not meet expectations, the effects of digital transformation did not meet expectations, and profit and loss fluctuations from changes in fair value were greater than expected.