毛利率角度，2023 年实现毛利率72.6%，维持高位。费用率角度，2023 年员工成本/实际租金/折旧摊销相关费用占收入比重分别同比改善0.2/1.3/2.8pcts，其中2023H2 员工成本/折旧摊销相关费用占收入比重分别环比改善1.9/4.9pcts，我们认为此类费用占比的改善主要源于规模优势。净利率角度，2023 全年/2023H2 分别实现经调整净利率0.3%/1.6%，同比均大幅改善。此外，2023 年公司门店层面利润率13.8%，同比提升近4pcts，彰显极强盈利潜力。Key points of investment
An adjusted net profit of 8.78 million yuan was achieved for the full year of 2023. Looking at the year-on-year loss, the company achieved revenue of 3.05 billion yuan (yoy +51%) and realized net profit of 2.66 billion yuan in 2023. The year-on-year loss narrowed, achieving an adjusted net profit of 8.78 million yuan, reversing the year-on-year loss. Looking at 23H2 alone, 2023H2 achieved revenue of 1.67 billion yuan (yoy +51%) and realized net profit of 3.54 billion yuan. The year-on-year loss narrowed, and achieved adjusted net profit of 26.22 million yuan, reversing the year-on-year loss. The sharp increase in performance stemmed from the simultaneous rise in store opening and sales. In 2023, the company opened 180 net stores, which accelerated significantly; at the same time, the average daily sales of a single store increased by 10% year-on-year in 2023, driven by new growth markets, achieving a high increase in store sales.
With the advantage of scale, the cost ratio has been greatly improved
From a gross margin perspective, a gross profit margin of 72.6% was achieved in 2023, which remained high. From an expense ratio perspective, the share of employee costs/actual rental/depreciation and amortization related expenses as a share of revenue increased by 0.2/1.3/2.8 pcts year-on-year respectively in 2023. Among them, 2023H2 employee costs/depreciation and amortization related expenses as a share of revenue increased 1.9/4.9 pcts month-on-month, respectively. We believe that this improvement in the share of expenses is mainly due to scale advantages. From a net interest rate perspective, the full year of 2023/2023H2 achieved adjusted net interest rates of 0.3%/1.6%, respectively, with significant year-on-year improvements. Furthermore, in 2023, the company's store-level profit margin was 13.8%, an increase of nearly 4 pcts over the same period last year, showing strong profit potential.
Store opening has accelerated, store sales have increased, and brand potential continues to improve
On the store opening side, the company opened 180 net stores in 2023, compared with 54 net stores opened in 2022, which is a significant acceleration. In terms of distribution, the net opening of 140+ stores in the new growth market is the main source of new stores. On the store sales side, the average daily sales of a single store in 2023 was 12,600 yuan, +10% compared with the same period last year. Looking at the subregions, the average daily sales of a single store in the Beijing/Shanghai/New Growth Market were 12,300 yuan, respectively. Among them, the new growth market was +36% year-on-year, achieving rapid growth. The brand's momentum continues to rise, and the new store's daily sales continue to exceed expectations. According to the announcement, 23H2's 48 stores in the six cities of Jinan/Wuhan/Chengdu/Qingdao/Wenzhou/Changzhou have an average daily sales of 32,000 yuan, and the average expected return on investment period is about 9 months.
The 10 new stores that opened in late '23 to early '24 were all in the top 15 sales for the first 30 days of Domino's global store network.
Profit forecasting and valuation
The company is the exclusive franchisee of Domino's Pizza in China and has continued to grow rapidly since expanding its franchise scope in 2017. We expect the company to achieve operating income of 40.80/52.59/6.716 billion yuan in 2024-2026, and achieve net profit to mother of 0.12/0.59/236 million yuan. Considering the company's long brand history, excellent model after practical verification in many countries around the world, and at the same time, it is still developing rapidly domestically, so we maintain an “increase” rating.
Risk warning: opening a store falls short of expectations, food safety, macroeconomic stagnation, etc.
