Key points of investment:
The company released its 2023 annual report, and the results were in line with expectations. For the full year of '23, we achieved revenue of 12.224 billion yuan (retail business achieved revenue of 10.585 billion yuan, leasing business achieved revenue of 1,639 billion yuan), an increase of 13.2% over the previous year.
Net profit of 709 million yuan was achieved for the full year of '23, in line with the profit range of 65-780 million yuan announced in the performance forecast, an increase of 264.1% over the previous year, to achieve deducted non-net profit of 636 million yuan, and in line with the range of deducted non-net profit of 57-680 million yuan announced in the performance forecast. In the fourth quarter of a single quarter, the company achieved revenue of 2,959 billion yuan, an increase of 26.8% over the previous year, achieved net profit of 61.47 million yuan to mother, and a loss of 220 million yuan in the fourth quarter of '22.
Department stores, Olay, shopping malls, and duty-free businesses all showed a recovery trend. Ole's business recovered rapidly due to its cost-effective business performance. By business type, duty-free, department store/ shopping center/ olle/ supermarket/ specialty stores achieved revenue of 1.87/56.09/25.80/20.34/3.75/1,509 billion yuan respectively. Among them, the outlet business maintained a high growth trend, with revenue +35.09% year-on-year, and business revenue accounted for 15% of the company's revenue. The revenue of specialty stores/shopping centers/department stores increased 16.35%/7.69%/6.22% year over year. The supermarket business was affected by downsizing and fierce competition, and revenue decreased 18.51% year over year. The department store business accounted for 42.42% of the company's revenue. The shopping center business achieved good growth as a large-scale commercial space carrying more new lifestyle content, accounting for 19.5% of the annual revenue. The company's comprehensive gross margin for the year was 41.8%, +3.55pct year-on-year. By business type, the gross margin of department stores/shopping centers/outlets/supermarkets/specialty stores was 36.4/49.39/68.72/13.96/ 14.99%, +4.83/+1.23/+5.49/-0.89/+0.71 pct. The tax exempt business was changed from the total revenue method to the net amount method. Revenue and gross profit were not comparable to the previous period, and the tax exemption business achieved a gross profit margin of 19.19% for the full year of '23.
The share of member spending has risen markedly, passenger traffic and number of customer transactions have gradually recovered, and consumption of new energy vehicles in the shopping center industry is growing rapidly. In terms of customer structure, customer traffic and transaction frequency in the company's shopping centers and department stores all increased dramatically in '23. Among them, passenger traffic increased 40% year on year, and the number of transactions increased nearly 40% year on year. In terms of customer structure, member spending increased by nearly 26% year on year, and the increase was better than that of non-member consumption. By product category, in the department store industry, sales of women's clothing and men's clothing increased by more than 21% year on year, while the sports category increased by nearly 20% year on year. In the Olay business, sales of sports, men's clothing, women's clothing, and jewelry increased by nearly 50% year on year. In the shopping center business, consumption of new energy vehicles grew rapidly, with a year-on-year increase of more than 84%.
The company announced the repurchase plan and dividend plan, demonstrating confidence in future development. Based on firm confidence in future development prospects and high recognition of the company's long-term value, the company plans to repurchase shares through centralized bidding transactions. According to the company announcement, it is disclosed that the repurchase amount is 1-2 billion yuan with its own funds, the maximum repurchase price is 17.5 yuan/share. The number of shares repurchased is 571.43-11.4285 million shares, and the repurchased shares account for 0.51% to 1.00% of the total share capital. The company announced its profit distribution plan for fiscal year 23. The company plans to distribute a cash dividend of 2.00 (tax included) to all shareholders for every 10 shares, for a total of 227 million yuan in cash dividends, with a cash dividend ratio of 32%.
Maintain a “buy” rating. The company's key projects are progressing smoothly, and offline traffic is gradually recovering. We maintain our profit forecast. We expect net profit to be 905/1,109 million yuan for 24-25, respectively, and net profit for the additional 26 years to be 1,271 billion yuan.
The current stock price is 16/13/11 times PE for 24-26, respectively, maintaining a “buy” rating.
Risk warning: Market competition has intensified, consumption recovery falls short of expectations, and the development of duty-free business falls short of expectations.