The company released its 2023 annual report:
(1) 2023: The company achieved operating income of 12.224 billion yuan/ +13.19%, achieved net profit of 709 million yuan/ +263.94%, and realized net profit of 636 million yuan/loss after deduction of loss to profit. The sharp increase in profit compared to the same period last year was mainly affected by a significant increase in profits in the main business driven by sales growth.
(2) 2023Q4: The company achieved operating income of 2,959 million yuan/ +26.80%, achieved net profit of 61 million yuan/loss to profit, and realized net profit of 46 million yuan/loss to profit after deducting non-return to mother.
Both gross profit margin and net profit margin have improved:
In 2023, the company's gross profit margin was 41.84% /+3.55pcts, and the net profit margin was 5.80% /+4.00pcts.
The sales/management/ financial expense ratios were 15.16%/12.14%/2.38%, respectively, -0.59pct/-2.31pcts/-0.04pct. Among them, the reduction in management expenses was mainly due to the performance indicators that did not complete the requirements for the second exercise period during the reporting period, and the reduction in financial expenses was mainly due to an increase in lease financing expenses and a decrease in interest income.
By business type, Ole and the duty-free business are growing at impressive rates:
In 2023, the company actively expanded sales and increased efficiency. The department store sector's revenue was 5.609 billion yuan/ +6.22%, with a gross profit margin of 36.44% /+4.83pcts. The growth rate was relatively slow, but it was still the main component of the company's performance achievement, accounting for 42.42%. Shopping center business revenue of 2,580 billion yuan/ +7.69%, gross profit margin 49.39% /+1.23pcts. The revenue growth rate of the outlet business was remarkable, achieving revenue of 2,034 billion yuan/ +35.09%, and a gross profit margin of 68.72% /+5.49pcts. The supermarket business was affected by the reduction in business scale and fierce market competition. Revenue declined by 375 million yuan/ -18.51%, and gross profit margin was 13.96%/-0.89pct. The specialty store business was affected by the recovery in consumption, with revenue growth of 1,509 billion yuan/ +16.35%, and gross profit margin of 14.99% /+0.71 pct. The tax-free business had revenue of 1,883 billion yuan and gross margin of 19.19 pcts.
Business vitality continues to improve, and key projects are progressing smoothly:
During the reporting period, the company continuously refreshed its business content and effectively attracted customers. The main business stores adjusted a total of 6041 brands throughout the year, with a comprehensive adjustment rate of 38%, including 2,601 new brands and 441 first stores; held a number of special themed marketing activities, covering nearly 100 mainstream media, and had an overall exposure of more than 500 million times across all channels. It also carried out holiday marketing such as the New Season, Green Life Festival, and the 925 Beautiful Life Festival, as well as IP marketing such as Space Jade Little Rabbit, Tang National Treasure Meets National Treasure; key projects progressed smoothly. Yue Yue Shopping Center Project It opened successively at the end of 2023.
Investment advice:
Buy-A investment rating, 6-month target price of 14.28 yuan. We expect the company's revenue growth rates from 2024 to 2026 to be 15.1%, 12.2%, and 9.5%, respectively, and the net profit growth rates will be 52.3%, 27.2%, and 22.4%, respectively, with outstanding growth; given a buy-A investment rating, the target price for 6 months is 14.28 yuan, which is equivalent to a dynamic price-earnings ratio of 15x in 2024.
Risk warning: offline consumer demand falls short of expectations, industry competition intensifies, management and operation risks, new business formats fall short of expectations, etc.