Performance summary: 1) 2023: Achieved revenue of 18.985 billion yuan/yoy +3.72%, net profit to mother of 1,315 billion yuan/yoy +48.84%, after deducting net profit of 1,129 million yuan/yoy +41.73%. Cash dividends of 122 million yuan, with a dividend ratio of 45.63%. The company achieved net profit of 1,982 million yuan with 31.06% equity participation and confirmed investment income of 615 million yuan. 2) 4Q23: Achieved revenue of 4.207 billion yuan/yoy +10.86%, net profit of 187 million yuan/yoy +213.17%, net profit of non-return to mother 109 million yuan/yoy +52.25%.
With the exception of supermarkets, businesses other than supermarkets have achieved positive growth. 1) By industry, ① department store revenue is 2,015 million yuan/yoy +8.81%; ② supermarket industry revenue is 6.183 billion yuan/yoy -5.51%; ③ electrical appliance industry revenue is 2,927 billion yuan/yoy +19.52%; ④ auto trade industry revenue 6.083 billion yuan/yoy +13.18%; ⑤ revenue of other industries is 358 million yuan/yoy -32.81%. 2) By region, ① Chongqing's revenue is 17.231 billion yuan/yoy +5.42%; ② Sichuan revenue is 292 million yuan/yoy -11.52%; ③ Guizhou region's revenue is 5.69 million yuan/yoy -28.63%; ④ Hubei's revenue is 37.42 million yuan/yoy -7.21%. 3) By channel, in 2023, the company's online and offline sales were 2,727 billion yuan and 31.331 billion yuan respectively, accounting for 8.01% and 91.99% of online and offline sales respectively.
In terms of rate: 1) In terms of gross margin, the company's gross margin level rose 0.28pct to 19.89% in 2023. Among them, department stores, supermarkets, electrical appliances, auto trade, and other industries achieved gross profit margins of 65.99% /+1.74pct, 17.36% /+1.90pct, 19.77% /-0.06pct, 6.25% /-1.05pct, 36.66%/-1.70pct, respectively.
The gross margins of Chongqing, Sichuan, Guizhou and Hubei were 19.34% /+1.74pct, 51.38% /+7.94pct, 86.14% /+8.24pct, and 18.70% /-3.30pct, respectively. 2) In terms of expenses, the company achieved a sales/management/R&D/finance expense ratio of 13.75%/5.19%/0.14%/0.65%, -1.00/+0.42/-0.05/-0.01pct in 2023. The rate reduction was mainly due to the company's systematic cost reduction and efficiency in 2023.
Systematic cost reduction and efficiency, reduction of rent, energy expenses and labor costs. The company actively implemented rent reduction policies, reducing rent expenses by a total of 84.66 million yuan within one year; strictly restricting marketing and energy expenses, saving a total of 56.8 million yuan throughout the year; continuously promoting cost and cost reductions. Since 2019, labor costs have continued to be reduced every year; and through joint procurement and independent bidding methods in the five regions, a total of 35.35 million yuan was saved throughout the year.
Digital intelligence promotes integration and innovation, and increases member sales. Through digital empowerment, the company has promoted deep integration in the four major fields of products, membership, channels, and marketing. The number of company members in '23 was 27.6 million, with sales of 16.498 billion yuan/yoy +7.15%, accounting for 59% of total retail sales. Promotion activities integrating a full range of business formats have brought in revenue of 4.15 billion yuan; at the same time, the company has continuously improved applications integrating multiple business formats, enriched the local lifestyle service ecosystem, and established a comprehensive ecological alliance including “food, lodging, travel, travel, shopping, and entertainment”.
Investment advice: We expect the company to achieve net profit of 1,446/15.97/1,763 billion yuan in 24-26, a year-on-year change of +10.0%/10.4%, corresponding to PE 8/7/7X on April 19, and the company's dividend ratio for 20-22 is 142.73%/153.23%/30.85%, respectively. The valuation is low under high dividends, and the “recommended” rating is maintained.
Risk warning: Consumer demand falls short of expectations, and showrooms fall short of expectations.