Driven by high base and supermarket business, the company's profit declined year-on-year: revenue of 30.519 billion yuan/YoY -5.47% in '23, gross profit margin of 26.54% /+1.60pct, net profit margin -0.19% /-2.09pct; 23Q4 revenue of 6.960 billion yuan/-2.83% year on year, accounting for 0.55 billion yuan/ -91%. The proposed cash dividend was 214 million yuan, accounting for 53.64% of net profit returned to mother in '23, a significant increase over previous years.
In terms of business data: 1) Comprehensive department stores achieved revenue of 1,839 million yuan/ +11.11%, gross profit margin of 22.50%/-0.03pct; 2) Shopping malls achieved revenue of 1,541 billion yuan/ +23.70%, gross profit margin of 49.42%/+10.41pct; 3) Outlets achieved revenue of 1,369 million yuan/ +41.50%, gross profit margin of 74.84% /+2.67pct; 4) Professional monopoly achieved revenue of 792 million yuan/ +38.05%, gross profit margin of 28.13% /+9.42pct .
Supermarket business losses affected the company's performance: As of the end of '23, there were 1,288 Lianhua supermarket stores, +31 at the end of the previous year. Among them, the standard supermarket business achieved revenue of 11.286 billion yuan/ -1.57%, gross profit margin of 17.51%/-1.68pct; convenience stores achieved revenue of 1,644 billion yuan/ +5.88%, gross profit margin of 14.24%/-0.29pct; hypermarkets achieved revenue of 10.857 billion yuan/ -20.71%, and gross profit margin of 22.97% /+0.8 pct. The net profit of the subsidiary Lianhua Supermarket (holding 20% shares) in '23 was 709 million yuan, with an impact of 140 million yuan.
The company has excellent operating capabilities and accurately upgraded all types of stores: 1) Focus on rejuvenation: ① As the country's first commercial enterprise focusing on dimensional culture, with sales of 300 million yuan in 23, receiving 9.5 million customers and 200,000 members; ② The country's first “curated retail”, Bailian TX Huaihai had an average daily passenger flow of nearly 50,000 people in May '23, with an average daily passenger flow of 25,000 people; 2) Continued upgrading of the established business: ① First Yaohan completed the second round of brand upgrades and adjustments, with sales volume of 3.9 billion yuan in 23; ② Bailian Xijiao Shopping Center After the renewal, it reopened, focusing on the first-store effect and signing 200+ brands; 3) Olay: Qingdao Jimo Ole officially opened in 23, Qingpu Olay had sales of 6.17 billion yuan in 23, and sales of nearly 45 million yuan in a single day on May 1st, breaking the 17-year history of opening.
Actively innovate commercial REITS and optimize the asset structure: In July '23, the company announced the launch of a publicly raised infrastructure securities investment fund targeting Shanghai's Youyicheng Shopping Center to help shift asset-heavy operations to an asset-light development model. Application materials related to the company's REITs were submitted to the Securities Regulatory Commission and the Shanghai Stock Exchange in January '24, and were officially accepted.
Financial analysis: 1) In terms of profitability, it is mainly affected by the high REITS issuance base last year and the drag on supermarket business. In 23, the company achieved gross sales margin of 26.54% /+6.42pct, net sales profit margin -0.19% /+1.77pct; sales rate 16.52%/-0.37pct, management rate 7.35% /+0.50pct, financial rate -0.06% /-0.41pct; 2) The company's book capital of 19.431 billion yuan/ +0.83%, net operating cash flow 36.23 billion yuan/ +6.46%.
Investment advice: As an established leading retailer in East China, the company has superior asset quality and significant advantages in location, brand and strategic cooperation resources. Innovative asset securitization is expected to optimize the company's asset structure and gradually move towards a long-term approach that focuses on operations. Furthermore, it is recommended to pay attention to developments related to tax exemption business within the company.
Risk factors: Weak spending power, duty-free business falls short of expectations, supermarket business continues to lose money