Core views:
The company announced its 23-year results: operating income of 1.21 billion yuan for the full year of '23, a year-on-year decline of 22.5%, mainly due to the company's continuous adjustment of stock stores; net profit of 180 million yuan to the mother, turning a loss into profit (loss of 1.60 billion yuan in '22), a record high since listing; adjusted net profit of 280 million yuan, which turned a loss into profit (loss of 240 million yuan in '22). The difference between net profit and net profit due to stock store adjustments was mainly due to losses caused by stock store adjustments. The company's net return interest rate in '23 was 14.9%, up 0.9 pp from '19, and the adjusted net interest rate was 23.2%, up 9.2 pp from '19.
The stock of stores continues to be adjusted, and the Hi Beer partner model continues to advance. In '23, the company adjusted its strategy and transformed into an asset-light platform company. According to the company's financial reports, by the end of '23, there was a net decrease of 398/22 in '23, with a net decrease of 398/22, and 236/84 as of March 19, '24; as of March 28, '24, Hi Beer Partner stores had signed 383 contracts and had opened 188 stores, covering 136 cities, including 69 stock markets and 67 new markets. We expect the Hi Beer partnership model to be promising in '24 Accelerate expansion.
Hi Beer Partner's store floor efficiency is high. According to the company's financial report, the average daily sales of directly-managed taverns and franchised partner taverns increased 4% year-on-year to 7,300 yuan. The average daily sales of a single store of Hi-Beer Partners was 7,000 yuan, which is a small gap with directly-managed and franchised cooperative pubs, but considering the smaller size of Hi Beer Partner's taverns, the average daily floor efficiency was 19/20/34 yuan per square meter for 23 years.
Profit forecasting and investment advice. The company's net profit for 24-26 is estimated to be 2.0, 260 million yuan, and 340 million yuan, respectively, up 10.3%, 29.6%, and 30.6% respectively. Considering the new model, the company is expected to accelerate store expansion and cover a wider range of sinking markets. Referring to comparable companies, the company is expected to continue to strengthen. Referring to comparable companies, the company will be given 20 times PE in 24 years, with a corresponding reasonable value of HK$3.41 per share, giving it an “increase in weight” rating.
Risk warning. The speed of opening stores fell short of expectations; the development of new models fell short of expectations; competition in the industry intensified.