Incident: Tongqinglou released the 2023 Annual Report and 2024 Quarterly Report.
In 2023, the company achieved operating income of 2,401 billion yuan, a year-on-year increase of 43.76%, achieved net profit of 304 million yuan, a year-on-year increase of 224.91%, and realized non-net profit withheld from mother of 253 million yuan, an increase of 240.03% over the previous year. In the first quarter of 2024, we achieved operating income of 691 million yuan, a year-on-year increase of 28.01%, realized net profit of 66 million yuan, a year-on-year decrease of 8.84%, and realized deducted non-net profit of 64 million yuan, an increase of 5.32% over the previous year.
New stores are expanding rapidly, and old stores are being remodeled to improve competitiveness. The company opened 8 new stores in 2023, including 6 restaurants and 2 hotel stores, adding 123,000 square meters of store area throughout the year, and plans to add 265,000 square meters of store area in 2024. The total operating area of the company is expected to be nearly 800,000 square meters by the end of 2024. In terms of the renovation of old stores, the company renovated 9 old restaurants to improve the dining environment and strengthen the brand.
The hotel business developed rapidly and topped the list of luxury brands in Anhui Province. Beicheng Fumao and Fuyang Fumao were completed and operated in 2023. Currently, the company has opened 6 Fumao hotels and is preparing 3 hotels. It ranks first among luxury hotel brands in Anhui Province in terms of comprehensive business scale, business area, and number of guest rooms.
The food business is growing rapidly, and the chain business is developing collaboratively. The food business achieved revenue of 167 million yuan in 2023, an increase of 78.3% over the previous year. The franchise store “Tongqinglou Fresh Meat Dabao” has opened 80 stores and is about to open 60. The offline chain business and the food business form a synergy effect and promote each other.
Investment advice: The company is mainly engaged in the catering and banquet business, which is scarce. Considering that the company's stores have a large expansion space and the food business is in a period of rapid development, we expect to achieve revenue of 31.4/38.7/4.52 billion yuan in 2024-2026, an increase of 30.8%/23.2%/16.9% over the previous year, and achieve net profit of 4.0/5.4/670 million yuan, an increase of 30.5%/34.7%/26.0% over the previous year, maintaining the “increase in holdings” rating.
Risk warning: store expansion falls short of expectations; food business growth falls short of expectations; other risks