Incident: 2024Q1 achieved revenue of 2,681 billion yuan, +26.42% year on year, net profit to mother of 713 million yuan, or -41.66% year on year, net profit without return to mother of 691 million yuan, or -36.03% year on year.
The business blossomed a bit in the first quarter. 1) Market operation business: The company's main business has entered a new stage of development with sharp rise in volume and price. The price increase mainly comes from the new market. The hardware and appliance market on the east third floor of Zone 2 opened on April 12, and the first phase of the Global Digital Trade Center project completed intermediate inspection of the main structure; 2) CG business: 2024Q1GMV reached 11 billion yuan, +37.5% year over year, with an annual target of 80 billion yuan (more than +23% year over year); 3) Payment business: 2024Q1 completed cross-border transactions of US$865 million, the company's target is US$865 million Over $10 billion in transactions in 3-5 years.
The profit of the main business doubled. 2024Q1's gross margin was 39.05%, up 8.02pct year on year. It is estimated mainly due to seat selection fees and new business contributions with high profit margins on the east third floor of District 2; sales/management/R&D expenses were 1.33%/3.79%/0.21%, respectively, and +0.21/-1.35/ -0.07pct, respectively. The large decline in net profit from 2024Q1 was mainly due to the high investment income (777 million yuan) and asset disposal income (165 million yuan) in the same period last year. The investment income of 2024Q1 was only 42 million yuan. After excluding the impact of investment income and asset disposal income, the company's main business profit was +95.95%.
Yiwu's trade boom is booming. From January to February 2024, Yiwu's total import and export value reached 116.6 billion yuan, up 47.3% year on year (+8.7%), of which exports reached 102.77 billion yuan, an increase of 41.0%. The import and export growth rate to Africa, Latin America, ASEAN, Saudi Arabia and other regions reached more than 50%. Yiwu International Trade City had an average of 3,523 foreign investors per day in 2024Q1, an increase of 160.2% over the previous year. The boom was higher than the same period in 2019 and 2023.
Investment suggestions: Improve the quality of the company's profits, revitalize and explore old markets, expand new markets, and implement new trade contracts to jointly drive subsequent growth, and the transformation logic continues to be implemented. We expect 2024-26 net profit of 24.3/27.1/3.56 billion yuan, corresponding to PE 19.1/17.1/13.0X, to maintain the “increase in holdings” rating.
Risk warning: Chinagoods platform development falls short of expectations; payment business progress falls short of expectations; new business-related talent reserves fall short of expectations; Yiwu market policy advantages reduce risk.