Introduction to this report:

Ole continues to grow at a high rate, and consumer demand still needs to pick up.

Key points of investment:

Investment advice: Performance fell short of expectations. The company's 2024-2025 net profit EPS was lowered to 0.28 (-0.14) and 0.36 (-0.16) yuan, respectively, and the estimated EPS in 2026 was 0.48 yuan. Referring to the valuation of comparable companies in the same industry, 37xPE was given slightly higher than the industry average in 2024, and the target price was lowered to 10.51 yuan to maintain an increase rating.

Performance summary: In 2023, the company achieved operating income of 30.519 billion yuan/ -5%, net profit of 399 million yuan/year over year, and net profit of 194 million yuan/year on year after deduction of net profit not attributable to mother.

Among them, in the Q4 single quarter, 2023Q4 achieved operating income of 6.960 billion yuan/ -3%, net profit to mother 55 million yuan/-94% year-on-year, and net profit of non-return to mother of -83 million yuan.

Excluding the company's 2022 sale of assets and issuing REITs, net profit not returned to mother increased significantly. By business format, department stores, shopping malls, and outlets achieved revenue of 1,839 billion yuan, 1,541 billion yuan, and 1,369 billion yuan respectively, up 11.11%, 23.70%, and 41.50% year-on-year; gross margins reached 22.50%, 49.42%, and 74.84%, respectively, with year-on-year increases of 0.22pct, 10.41pct, and 2.67pct.

The cash dividend ratio has increased dramatically, and new consumption scenarios are being actively explored. In 2023, the company will focus on the integration of the four “business+” cross-border integration, and continue to depict Bailian's unique “business+” civilization in the “business+” era with the development path of a “business+” youth power center, a “business+” fashion incubator, and a “business+” urban micro-vacation development path. While operating steadily, the company plans to distribute a cash dividend of 1.20 yuan per 10 shares to all shareholders for a total cash dividend of 214 million yuan, accounting for 53.64% of net profit returned to mother in 2023, a significant increase over the previous year's dividend rate.

Risk warning: Consumer demand is weak, store expansion falls short of expectations, and industry competition intensifies.