Incident: The company released a quarterly report. In 24Q1, it achieved revenue of 18.807 billion yuan/yoy -9.45%, operating profit of 2,908 billion yuan/yoy -7.78%, achieving net profit of 2,306 billion yuan/yoy +0.25%, after deducting non-return net profit of 2,299 billion yuan/yoy +0.15%.
The company's profitability continued to improve. In 24Q1, the company's gross margin increased 1.3 pct to 33.3% over 23Q4, 4.3 pct from 23Q1, and the net profit margin increased 3.3 pct to 12.3% month-on-month, and 1.2 pct from 23Q1. The main reason was the further recovery of the entry/exit duty-free business, and the proportion of the company's offline business continued to rise, and the superposition of the product sales structure continued to improve.
From January to January 2024, Hainan received 32.614 million visitors/yoy +17%. This was mainly due to a high level of enthusiasm for tourism among citizens, and domestic travel in early 23 was still affected to a certain extent by the epidemic. The increase in the number of tourists provided support for the number of duty-free shoppers on the outlying islands of Hainan, but considering the decline in the share of proxy purchases in the duty-free shopping group and the impact of the macro-consumption environment, duty-free sales declined year-on-year. From January to January '24, the number of duty-free shoppers on the outlying islands of Hainan was 2.133,000/yoy -5%. The total duty-free sales volume was 12.76 billion yuan/yoy -24%, and the customer unit price was 5984 yuan/person, yoy -21%. During the three-day Qingming holiday in '24, Haikou Customs supervised a total of 271 million yuan in duty-free sales on the outlying islands. The number of shoppers was 47,000, and the per capita consumption was 5,767 yuan.
In the future, we still need to pay attention to the emergence of an inflection point for duty-free consumption, pay attention to the performance of Haitang Bay Building C and the climbing of the new seaport, pay attention to the airport's duty-free passenger flow and passenger unit price recovery progress, and pay attention to the Hainan Free Trade Port policy and the city's duty-free policy trends.
Profit forecast and investment advice: We are optimistic about long-term consumption return trends and the price advantage of leading duty-free operators under the consumption hierarchy. We expect the company's 24-26 revenue to be 779/895/102.5 billion yuan, yoy +15%/15%/15%, and net profit to mother of 75/90/10.7 billion yuan, yoy +12%/20%/19%. The current stock price corresponds to PE is 20/17/14X, maintaining the “recommended” rating.
Risk warning: the risk of macroeconomic fluctuations, the risk that the recovery of consumption power falls short of expectations, and the risk of policy implementation falling short of expectations.