Introduction to this report:
The company's performance in 2023 fell short of expectations, mainly due to sales falling short of expectations during the Double Eleven promotion, which raised the cost rate. 24Q1 revenue and profit improved significantly by +27% and +22%, respectively, and we look forward to continued repairs in the future.
Key points of investment:
Investment advice: Considering the slow restoration of brand potential and the increase in online traffic costs, reduce the 2024-25 EPS forecast to 2.49 (-0.45) /2.99 (-0.53) yuan, add the 26-year EPS forecast of 3.50 yuan, give the 24-year 30x target PE, lower the target price to 74.7 yuan, and maintain the increase rating.
Results in 2023 fell short of expectations, improving month-on-month in 24Q1. In 2023, the company's revenue/attribution/deduction of non-net profit was 5,522/7.57/618 million yuan, +10%/-28%/-35% year-on-year. The year-on-year decline in profit was mainly due to the Double Eleven Promotion Company's sales falling short of expectations, and marketing expenses, etc., which increased the cost rate due to pre-investment. In 2023, the company's gross profit margin was 73.90%, -1.31pct year on year, mainly due to changes in product structure and product upgrades; sales, management and R&D expenses ratio of 47.26%, 7.48%, 5.41%, +6.42, +0.74, +0.33pct year on year; net profit margin to mother 13.75%, -7.20pct year on year. 24Q1's revenue/attribution/ deducted non-net profit of 10.97/1.77/154 million yuan, +27%/+22% year-on-year. Revenue and profit improved month-on-month, excluding Yuejiang investment consolidation factors, which affected the company's original 24Q1 revenue of 959 million yuan, +11% year-on-year, and the growth rate improved month-on-month.
Online TikTok and offline OTC drivers are increasing. In 2023, the company's online (public domain), OMO (private online+offline) and offline channels had revenue of 35.52 billion yuan, 5.23 billion yuan, and 1,427 billion yuan respectively, -0.4%, +10.3%, and +48.9% respectively, and the share of public domain online fell to 65%. Among online channels, Alibaba, Douyin, Vipshop, and JD were -14.5%, +47.1%, +1.6%, and +5%, respectively. In offline channels, OTC led growth by +66.1% YoY.
Yuejiang invested and listed, and the sub-brand matrix is rich. In 2023, Yuejiang invested in consolidated revenue of 104 million yuan, net profit of 08 million yuan, and added Volkswagen brands ZA and Bomei to a rich brand matrix.
Risk warning: Market competition intensifies, marketing expenses increase, and new brand incubation falls short of expectations.