Revenue in 2023 fell 18.6% year on year, with net loss to mother of 2.2 billion yuan. Maintaining the shareholding increase rating, the company released its annual report for the year 23. In 2023, it achieved operating income of 11.5 billion yuan, down 18.6% year on year; achieved net loss of 2.2 billion yuan to mother, which is in line with the net loss range of 19.8-2.38 billion yuan given in the performance forecast. On the one hand, the company's losses were due to pressure on the store business; on the other hand, it was due to the impairment of accounts receivable and contract assets, including operations related to the managed store, leading to an increase in asset impairment losses.
Considering that the controlling shareholder C&D will take some time to sort out and adjust Macalline's business, we expect the company's net profit to return to mother to reach 2.9, 4.2, and 81 million yuan in 24-26. The company's estimated net assets are $11.46 per share in 2024. Referring to Wind's consistent forecast average of 0.6 xPb in 2024, considering that the company's main business is under significant pressure, the company was given 0.4 xPb in 2024, with a target price of 4.58 yuan (previous value of $5.00); considering that since listing, the H/A share ratio was approximately 51%, and the target price for Hong Kong stocks was 2.52 HKD (previous value of HK$2.96; exchange rate: HKD = 0.92:1), maintaining an increase rating.
Self-operated stores are under some pressure, and the business of managed stores has shrunk significantly
In 2023, the company's self-operated store rental business revenue fell 13.8% year on year. On the one hand, it was due to store adjustments, 5 self-operated stores closed, 2 were converted to managed stores, and on the other hand, the rental rate fell 2.4 pct to 82.8% year on year. The contraction in the management business was even more obvious. The annual brand consulting business related to stock stores was relatively resilient. Revenue fell 10.9% year over year, and gross margin increased 4.6pct year over year; early brand information, business consulting, and investment commission revenue related to incremental projects all declined sharply, falling 41.4% and 67.9%, respectively.
The company actively improves the quality of operations and optimizes the category structure of the store
The company continues to implement a heavy operation strategy and further build the top ten theme pavilions, combining the electronics, home decoration design, and new energy vehicle sectors to stabilize occupancy rates. In July '23, the company reached a strategic cooperation with Shanghai Carnage Auto Service Co., Ltd. and other parties to test the waters for a new “one-stop home purchase” business from home improvement to home appliances, and automobiles. In 2023, the company reached investment cooperation with Tesla, BYD, and Huawei.
Waiting for the controlling shareholder C&D to empower the company, maintain the shareholding increase rating, weak real estate sales for 23 years, and the impact of changes in controlling shareholders (June 23), the company's business is clearly under pressure. The controlling shareholder C&D Group has strong business collaboration with listed companies in the supply chain and real estate business. Wait until C&F takes over and management adjustments are in place, then the listed companies' business will be sorted out again to revitalize the business vitality of leading home furnishing retail companies.
Risk warning: Weak real estate, closure of home furnishing stores, management adjustments falling short of expectations, and business collaboration between shareholders and listed companies falling short of expectations.