Introduction to this report:
The business sector continued to be optimized, profitability improved significantly, and dividends were better than expected; 2024Q1 showed a 96% increase in net profit after deducting investment income and asset disposal, showing strong growth.
Key points of investment:
Maintain an increase in holdings. Revenue in 2023 was $11.3 billion/+48.3%, net profit attributable to mother was 2.68 billion yuan/ +142%, after deducting non-2.47 billion yuan/ +39.9%, in line with expectations. Taking into account the decline in real estate investment income, EPS was lowered to 0.51/0.58 yuan (originally 0.55/0.71 yuan) with a growth rate of 5/14%. The forecast is that EPS will grow by 25% at 0.73 yuan in 2026, maintain the target price of 11.76 yuan, and maintain the increase.
The core business grew rapidly, and profitability increased. 1) Market operating revenue of 3.07 billion yuan/ +81.2%, trade services (CG+ payment+warehousing and logistics) 602 million yuan/ +43.4%, supporting services (hotel exhibition) 467 million yuan/ +79.3%, product sales 6.79 billion yuan/ +37.2%; 2) gross profit margin 26.5% /+11.2pct, of which market operation 71.8% /+28.5pct, trade services all increased significantly; net profit margin 23.7% /+9.2pct 3) camp Net cash flow of 1.85 billion yuan/ +31.8%; 4) 2024Q1 revenue of 2.68 billion yuan/ +26.4%, net profit to mother of 713 million yuan/ -41.7%, after deducting non-690 million yuan/ -36%, net profit increased 96% after deducting investment income and asset disposal.
CG and Payout are making a big splash, and dividends are expected to continue to rise. 1) The CG platform's 2023 GMV reached 65 billion yuan/ +82%, and the 2024Q1 GMV reached 11 billion yuan/ +37.5%; 2) The cross-border transaction volume in 2023 was 8.5 billion yuan, and the 2024Q1 exceeded 6.2 billion yuan, growing rapidly; 3) Successfully implemented the validation of data elements related to the Yiwu Index, and the amount of intangible assets-data resources that can be confirmed by the end of Q1 exceeds 8 million yuan; 4) 2023 dividends of 1.1 billion yuan, with a dividend rate of about 41 billion yuan %. Further increase may be expected in the future.
Yiwu's export boom is high, and foreign trade is expected to welcome new opportunities in 2024. 1) Yiwu's exports reached a record high of 50057 billion yuan/ +16% in 2023, with market purchases and exports of 388.37 billion yuan/ +19%; Yiwu's exports grew by 41% in January-January 2024, and the boom was still high; 2) The company adjusted rents for maturing positions, and rents increased by an average of 5.5%, which is expected to grow by no less than 5% in the next 3 years; 3) The hosting of global political and sporting events in 2024 will bring new opportunities to the offline market.
Risk warning: new business development falls short of expectations, international trade policy risks, increased competition, etc.