Traditional e-commerce platform strategies are being adjusted, performance is under pressure, and the rating of increasing holdings is maintained

One Network One Innovation released its annual report. In 2023, it achieved revenue of 1.29 billion yuan (yoy -16.3%), net profit to mother of 110 million yuan (yoy -40.1%), and deducted 100 million yuan in non-net profit (yoy -30.0%). Among them, Q4 achieved revenue of 394 million yuan (yoy -24.8%) and net profit to mother of 5.717 million yuan (yoy -117.3%). The e-commerce industry pattern is in the adjustment stage, and the company's traditional brand online management business has declined. The company took the initiative to downsize its original business, actively terminate underprofitable businesses, and clean up some brand inventory. Taking into account business adjustments, we lowered the company's 24-25 net profit forecast to 140 to 150 million yuan and added a 26-year net profit forecast of 160 million yuan. Comparatively, the company's 24-year Wind unanimously expected an average PE value of 21 times. Considering that the company is expected to build a strong competitive advantage in efficiency after investing in automation, the company will be given 30 times PE in 24 years, with a target price of 18.00 yuan (previous value 26.4 yuan), maintaining an “increase” rating.

The company actively implemented the “slimming and efficiency improvement” strategy for 23 years, and continued business adjustments for 23 years. The company took the initiative to dispose of investment companies Zhejiang Shangbai and Shanghai Domi. Due to the investment company's publication, the net profit returned to the mother in '23 affected about 20 million yuan. At the same time, due to the use of the new headquarters building, depreciation and amortization increased by 20 million yuan compared to '22. The company's business strategy also underwent major changes in '23. It actively handled underprofitable businesses and developed new ones such as Swisse, ILLY Coffee, Jibi, Beijieli, etc., and gradually began to lay out offline channels such as Sam, Costco, and Hema.

The disposal of traditional businesses and the development of new businesses led to a decline in profitability while the company's revenue declined in 23Q4, the development of new businesses led to a rapid increase in sales expenses. 23Q4's sales expenses increased 23.2% year over year to 71.75 million yuan. At the same time, due to credit impairment and asset disposal, the company recorded losses for the first time in a single quarter since listing.

Online sales growth is slowing down, and as a service provider, the company is facing challenges brought about by changes in old and new platforms. Against the backdrop of the slowing growth of the e-commerce industry, the company's business performance is under some pressure. At the same time, the sale of some shares in Zhejiang Shangbai also had a negative impact on reporting revenue and profits. As external demand gradually picks up and new cooperative brands become more mature, the company's profitability is expected to improve. We expect the company's net profit to be worth 1.4, 150, and 160 million yuan in 24-26 years. Comparatively, the company Wind unanimously expected the average PE value to be 21 times. Considering that the company invests in automation, it is expected to build a strong competitive advantage in efficiency. The company will be given 30 times PE in 24 years, with a target price of 18.00 yuan, maintaining the “gain” rating.

Risk warning: New business development falls short of expectations; new categories are not developing smoothly, and e-commerce growth is slowing down.