The company published its annual report for the year 23. In '23, the company's revenue reached 1,812 million yuan/yoy +28.10%, compared with the same period in '19; net profit of 60 million yuan/yoy +43%, compared with -20.93% for the same period in '19; net profit after deducting net profit of 31 million yuan/yoy +86.07%, compared with the same period in '19. Looking at Q4, the company achieved operating income of 460 million yuan/YoY +31.17%, compared with +74.81% over the same period in '19, and realized net profit of 4.247 million yuan/YoY -63.0%, mainly due to asset impairment losses in the 24Q4 liquor distribution inventory and real estate sales business.
The main hotel business picked up overall, and the profit margin of the collaborative business fluctuated. In '23, the travel market was booming, and the hotel business fully recovered: the company focused on hotel service quality, marketing channels, and membership system upgrades to achieve effect optimization; in '23, the hotel business achieved revenue of 564 million yuan/YoY +41.6%, and gross margin of 43.8% /YoY+10.6pct, constituting the main source of the company's profit growth. Businesses such as commodity trading/housing leasing/property management achieved revenue of 1,022/136.79 billion yuan, or +29.0%/-3.3%/+15.9% year-on-year respectively. However, the profit margins of these three collaborative businesses fluctuated, with gross margins of -6.6pct/-0.2pct/-5.7pct, respectively. Although the commodity trading business achieved a relatively rapid revenue growth rate, gross margin declined, and the sector's gross profit fell 20.66% year on year.
The overall control of the cost rate was stable. The company's sales, management, finance, and R&D rates in '23 were 5.30%, 12.28%, 1.21%, and 0.24%, respectively. The year-on-year change was -3.38pct, +0.13pct, -0.33pct, +0.01pct, and the cost rate was 19.03% /yoY-3.57pct. Among them, the changes in sales expenses were mainly due to a decrease in marketing and promotion fees and commissions of Sugang Company compared to the same period last year. The overall cost rate remained stable.
The new chairman took office to start a new chapter, and in the future, he will continue to consolidate brand building and strengthen the food business. In November '23, the former chairman, Ms. Li Qian, resigned as chairman and other positions. The current chairman, Mr. Bi Jinbiao, officially took office on December 18. Mr. Bi has previously served as Party Secretary of Jinling Hotel Group. His current tenure as chairman of a listed company is expected to improve overall decision-making efficiency and bring the Group's full business collaboration and resource empowerment to listed companies. In the future, the company will strive for lean development, optimize the service quality and operating efficiency of core projects, and strengthen the Jinling Hotel brand building. At the same time, it will also focus on food technology business, enhance capital strength and industrial chain operation capabilities, and promote product upgrades and channel expansion to further open up room for growth.
Investment suggestions: The company has high-quality core project assets and high-quality brand assets; as the reform of state-owned enterprises deepens in the future, the hotel industry's main assets will continue to be optimized, quality and efficiency, and potential resource integration will be the main focus; the continuous expansion of the food business will further open up room for growth. We estimate that the company's net profit for 24/25/26 will be 0.95/1.10/122 million yuan, respectively, and the corresponding PE will be 31/27/24x, respectively, to maintain the “recommended” rating.
Risk warning: State-owned enterprise reform progress falls short of expectations, food circuit competition incentives, and project development progress falls short of expectations.