The company released its 2023 annual report. In '23, the company achieved revenue of 12.224 billion yuan, +13.19% year over year; net profit to mother of 709 million yuan, +264.14% year over year; net profit after deducting non-return to mother of 636 million yuan. The company's performance gradually recovered in '23, showing confidence in development by increasing dividend repurchases. Looking ahead to the future market, the taxable business will grow steadily, and the duty-free business will gradually expand. We are optimistic about the increase in performance under two-wheel drive, and maintain the rating of increasing holdings.
Key points to support ratings
The company's business recovered steadily in '23, reversing year-on-year losses after deducting non-profits. In '23, the company achieved revenue of 12.224 billion yuan, +13.19% year over year, +11.19% year over year; net profit to mother of 709 million yuan, +264.14% year over year; net profit after deducting non-return to mother of 636 million yuan. Among them, 23Q4 achieved revenue of 2,959 billion yuan, +26.80% year-on-year; net profit to mother of 61 million yuan, reversing a year-on-year loss of 281 million yuan; net profit after deducting non-attributable net profit of 46 million yuan, reversing a year-on-year loss of 297 million yuan.
Ole's business is leading the way in growth, and the duty-free sector is gradually climbing. By business type, the company's revenue from department store/shopping center/ outlet/ supermarket/ specialty store/ duty-free business was +6.22%/+7.69%/+35.09%/-18.51%/+16.53%/(tax exemption added in 23 years); gross margins were 36.44%/49.39%/68.72%/13.96%/14.99%/19.19%, respectively. Due to the current cost-performance consumption trend, Ole's business achieved good revenue growth. The company added 1 new store in '23; the department store business achieved slight year-on-year growth, and single-store efficiency improved, which is still the main component of performance; the supermarket business was affected by scale reduction and fierce competition, and overall revenue contracted; in terms of duty-free business, Wangfujing International Duty Free Port operated overseas in January 23 and is currently climbing a slope.
Dividend repurchases have been strengthened, demonstrating the company's confidence in development. According to the announcement, in '23, the company plans to distribute a cash dividend of 2.0 yuan (tax included) to all shareholders for every 10 shares. In total, it is proposed to distribute cash dividends of 227 million yuan, with a dividend ratio of 32%, to focus on increasing shareholder returns. In addition, the company plans to use its own funds to repurchase shares to reduce registered capital. The repurchase amount is 1-2 billion yuan, and the repurchase price of shares is not higher than 17.5 yuan/share. This move also shows the company's confidence in future business development.
valuations
The company's taxable business is showing a recovery trend as a whole. Olai/shopping malls have shown strong resilience and are expected to maintain steady growth; duty-free sales on the outlying islands continue, and the subsequent launch of duty-free shops in the city is expected to broaden the room for imagination. Given that the climbing period of the new project dragged down performance, we expect the company's 24-26 EPS to be 0.81/1.04/1.21 yuan, corresponding price-earnings ratio of 16.2/12.6/10.8 times, and maintain an increase in holdings rating.
The main risks faced by ratings
The duty-free business fell short of expectations, the recovery in consumer consumption fell short of expectations, and market competition intensified risks