Core views:
The company announced the latest operating performance for 2024Q1, with a year-on-year increase in the number of units. According to the company's 2024Q1 operating performance announcement, 2024Q1 achieved a high unit increase in retail sales of the company's “LILANZ” products compared to the same period in 2023, continuing the growth trend in 2023. According to the company's financial report, in 2023, the company achieved revenue of 3.54 billion yuan, YOY +14.8% (main series/light business series increased 10.7%/35.2% respectively); net profit of 540 million yuan, YOY +18.4%, gross profit margin of 48.2%, up 2.2 pct year-on-year (mainly due to the increase in revenue share of the light business series with high gross margin); of these, 2023H2, the company achieved revenue of 2.05 billion yuan, YOY +21.6%, net profit of 260 million yuan, YOY +36.1%, gross profit margin of 45.5%, year-on-year ratio Increase by 1.8 pct.
The 24-hour full-year guidance shows confidence in development. According to the company's financial report, (1) the Group plans to increase the net number of 100-200 stores in 2024 (2,695 at the end of 2023, 51 net stores; 8/43 net stores for the main series/light businesses; 297/936/1,462 self-operated stores/distributors at the end of 2023), and the new stores will be selected as high-quality shopping centers in provincial capitals and prefecture-level cities. At the same time, it will increase Ole stores to clean up inventory. (2) In 2024, the Group plans to combine the complementary advantages of online and offline stores through new retail businesses such as Douyin live streaming, and strive to increase the new retail business by more than 20% year-on-year in 2024, with overall sales growth of 15%. (3) In 2024, the Group will complete the seventh-generation renovation project for 400 stores, enhance the brand image and shopping environment, and continue to launch innovative and differentiated products. (4) The Group plans to increase the launch of new products in 2024, and plans to increase the proportion of new products with higher sales prices to enhance overall profitability.
Profit forecasting and investment advice. The company's earnings per share for 2024-2026 are expected to be RMB 0.50/0.55/0.61, respectively. Referring to the valuation of comparable companies in Hong Kong stocks, the company was given 10 times PE in 2024, corresponding to a reasonable value of RMB 5.0 per share. In terms of exchange rate, the RMB used 1:1.10 for the Hong Kong dollar, corresponding to a reasonable value of HK$5.47 per share. For the first time, it was covered and given a “buy” rating.
Risk warning. Channel management risks, industry competition risks, extreme climate risks.