Operating performance: Net profit to mother increased significantly. The company's 2023 revenue was 82.4 billion yuan/ +0.4%, gross profit of 2,740 million yuan/ +5.9%, and net profit to mother of 448 million yuan/ +41.7%.

Operating data: The overall number of users increased, and members' retail service capabilities continued to be strengthened. The total number of registered member retail stores reached 23.7w/ +15%, the number of active member retail stores reached 9.07w/ +19.1%, active channel partner customers 1.25w/ -25.1%, and the total number of SaaS+ subscribers reached 13.18w/ +15.6%, of which 4.81 w/ +61.4% paid SaaS+ users.

Trading services sector: Revenue of 81.6 billion/ +0.5%, the revenue structure has been adjusted to a certain extent. Among them:

① The consumer electronics sector grew by 19.0%, and the company maintained strategic cooperation with leading brands in the industry to further expand sales channels;

② Revenue from agricultural means of production decreased by 22.3%, and the planting and breeding sector market fluctuated greatly in 23 years. The Group took the initiative to adjust the fertilizer and feed business structure.

③ Household appliances revenue fell by 11.5%, the home appliance market was weak in 23 years, and the company focused on maintaining cooperation with leading brands;

④ Transportation revenue fell 6.5%, and the company optimized its business structure, actively shrank part of the low-profit traditional auto parts business, and gradually focused on the NEV business; ⑤ Home building materials revenue fell 6.3%, mainly affected by the real estate market and construction industry cycle; ⑥ Alcohol and beverage revenue fell 32.0%, and production and sales in the liquor market showed a downward trend in '23, and the company adjusted its product structure.

Service business segment: revenue of 655 million/ -17.6%. Among them, the store's SaaS+ subscription revenue was 562 million/ +5.3%. Merchant Solution's revenue was 93 million/ -64.5%, mainly due to adjustments in merchant solution business strategies, which reduced some low-margin precision marketing and software customization services.

Brand cooperation continues to advance: the consumer electronics sector deepens cooperation with Apple; the consumer electronics sector continues to deepen cooperation with Midea, Gree, and Joyang; the agricultural production materials sector has mastered supply chain source resources such as nitrogen, phosphorus, potassium, and grain; the transportation sector continues to cooperate deeply with BYD, GAC Aian, and Nacha; the wine sector connects well-known brands such as Wuliangye, Yanghe, and Jinshiyuan; the washing and chemical sector continues to cultivate brands such as Unilever. In terms of our own brands, we have established breakthroughs in production and marketing integration, such as Zhonghuida Air Conditioner and Huizong Fertilizer, which focus on extremely cost-effective products.

Channel layout: Online and mainstream platforms have established good cooperation to help small stores expand sales channels. Offline, it has expanded more than 237,000 member retail stores, more than 20,000 service providers and channel partners, such as Shandong Sanlian, etc., forming an online and offline omni-channel layout.

Expenses: In 2023, the sales expense ratio is 1.7%, the management expense ratio is 0.5%, and the cost rate is basically the same; the absolute value of R&D expenses is 94 million/ -17.4%.

Profit forecast and valuation: Comprehensive forecast 2024-2025, the company's net profit to mother is 609/806 million yuan, corresponding to the current 26x/19xPE, with a “recommended” rating

Risk warning: consumption recovery falls short of expectations, category expansion falls short of expectations, user payments fall short of expectations