The company's 1Q2024 revenue decreased by 3.38% year on year, and net profit to mother decreased by 22.88% year on April 25. On April 25, the company announced the 2023 annual report and 2024 quarterly report: achieved operating income of 13.512 billion yuan in 2023, an increase of 4.08% year on year, and realized net profit of 1,300 million yuan for fully diluted EPS, a decrease of 21.10% year on year, resulting in net profit deducted from mother of 1,230 million yuan, a year-on-year decrease of 27.50%.
1Q2024 achieved operating income of 3.137 billion yuan, a year-on-year decrease of 3.38%, and realized net profit of 349 million yuan, converted into fully diluted EPS of 0.06 yuan, a year-on-year decrease of 22.88%, and realized net profit deducted from non-mother of 373 million yuan, a year-on-year decrease of 11.96%.
The company's comprehensive gross margin for 1Q2024 decreased by 2.47 percentage points, and the cost ratio increased by 0.43 percentage points. The company's comprehensive gross margin in 2023 was 34.11%, down 10.76 percentage points from the previous year. 1Q2024's consolidated gross margin was 36.73%, down 2.47 percentage points year over year.
The company's expense ratio for the 2023 period was 24.07%, down 0.37 percentage points year on year. Among them, sales/management/finance/R&D expenses were 11.77%/4.29%/7.72%/0.29%, respectively, with a year-on-year change of +0.63/+0.06/-1.07/+0.01 percentage points, respectively. The 1Q2024 company's expense ratio for the period was 20.60%, up 0.43 percentage points from the previous year. Among them, the sales/management/finance/R&D expenses ratio was 7.98%/4.35%/8.02%/0.26%, respectively, with a year-on-year change of +0.41/ +0.27/ -0.30/ +0.06 percentage points, respectively.
The transformation of digital intelligence is progressing smoothly. As of the end of 2023, the cross-border e-commerce platform “Xinwo” was launched and operated. The company operated a total of 414 home furnishing stores, including 86 direct-run stores and 328 franchise stores. In terms of digital intelligence transformation, by the end of 2023, Dongwo had a total of 934 online stores, up 173.1% year on year; more than 100,000 registered merchants, up 101.33% year on year; Dongwo achieved platform transaction volume (GMV) of 97.4 billion yuan in 2023, an increase of 173% year on year. In fact, Smart Home opened 57 new stores in 2023, and achieved sales exceeding 4.4 billion yuan in 2023, an increase of 58.4% over the previous year. By the end of 2023, the number of registered users of actually designers worldwide exceeded 14.77 million, an increase of 19% over the previous year. In terms of internationalization, the Phnom Penh store officially opened at the end of March 2024, and the cross-border e-commerce platform “Xinwo” is already in operation.
Profit forecast downgraded to “increase holdings” rating
The company's profit performance fell short of our previous expectations, mainly due to the relative pressure on the company's leasing and franchise management business. Considering the relatively weak consumer demand related to the real estate industry chain, we lowered our 2024/2025 net profit forecast of 36%/37% to 11.05/1,167 billion yuan, and added a forecast of 1,227 billion yuan for the company's 2026 net profit to mother. The company's main business is greatly affected by the real estate boom. There is still some uncertainty about the future performance recovery process, and the rating was downgraded to “increase holdings”.
Risk warning: Competition within the industry intensifies, new business development falls short of expectations, and the real estate industry chain recovery process falls short of expectations.