The company's 2023 revenue increased 16.82% year on year, and net profit to mother increased 56.90% year on March 29. On March 29, the company announced its 2023 annual report: in 2023, it achieved operating income of 810 million yuan, an increase of 16.82% year on year, and realized net profit of 134 million yuan to fully diluted EPS, an increase of 56.90% year on year, achieving net profit deducted from mother 132 million yuan, an increase of 57.44% year on year.
Looking at the single-quarter split, 4Q2023 achieved operating income of 195 million yuan, an increase of 28.12% over the previous year, and achieved net profit of 54 million yuan. This translates into fully diluted EPS of 0.13 yuan, an increase of 44.60% over the previous year, and realized net profit deducted from non-mother of 53 million yuan, an increase of 41.21% over the previous year.
The company's comprehensive gross margin increased by 0.73 percentage points in 2023, the expense ratio decreased by 3.29 percentage points, and the company's comprehensive gross margin in 2023 was 55.88%, up 0.73 percentage points from the previous year. Looking at the single-quarter split, the consolidated gross margin of 4Q2023 was 57.73%, down 0.14 percentage points from the previous year.
The company's expense ratio for the 2023 period was 31.91%, a year-on-year decrease of 3.29 percentage points. Among them, the sales/management/finance expense ratios were 5.80%/29.56%/-3.45%, respectively, with year-on-year changes of -0.13/ -3.72/+0.56 percentage points, respectively. The 4Q2023 company's expense ratio for the period was 23.64%, up 1.36 percentage points year on year. Among them, sales/management/finance expense ratios were 8.91%/19.03%/-4.31%, respectively, with a year-on-year change of +2.28/ -0.93/ +0.02 percentage points, respectively.
Marketing activities were carried out to improve the ability to attract customers. In 2023, the company's department store business achieved terminal retail revenue of 669.6483 million yuan, an increase of 20.88% over the previous year, achieving a floor efficiency of 0.63 million yuan/m2/year; the supermarket business achieved terminal retail revenue of 37.0376 million yuan, a year-on-year decrease of 9.39%, achieving a floor efficiency of 0.14 million yuan/m2/year. In 2023, the company will strengthen innovative management, expand cultural, sports, children's fun, and charity tracks, create diverse scenarios, and improve the ability of the main store, ZTE Tower, to attract customers. At the same time, the company participated in the live broadcast of local life, launched the credit card sales function, and launched online activities such as “ZTE Flash Sale” and “Happy Season 5” to channel traffic to offline stores. In terms of cost control, the company carries out strict budget management, strictly controls expenses, and reduces operating costs.
Raise profit forecasts and maintain the “increase in holdings” rating
The company's performance exceeded our previous expectations, mainly due to the large year-on-year decline in the company's expense ratio during 2023, which increased the company's profitability. We believe that with the company's refined management level, there is still some room for compression, raising the company's 2024/2025 EPS forecast 22%/22% to 0.36/0.39 yuan, and adding 0.41 yuan for the company's 2026 EPS forecast. The company actively carries out marketing activities, promotes the online process, improves management efficiency, and maintains a “gain” rating.
Risk warning: The operating conditions of major stores fell short of expectations, and competition in the retail industry in Shenyang and other regions intensified.