The company's 1Q2024 revenue decreased by 1.74% year on year, and net profit to mother decreased by 10.86% year on year
On April 26, the company announced its 2024 quarterly report: 1Q2024 achieved operating income of 3.308 billion yuan, a year-on-year decrease of 1.74%, and realized net profit of 202 million yuan, converted into fully diluted EPS of 0.18 yuan, a year-on-year decrease of 10.86%, and realized net profit deducted from non-mother of 193 million yuan, a year-on-year decrease of 13.72%.
The company's 1Q2024 comprehensive gross margin decreased by 1.58 percentage points, and the cost ratio decreased by 0.47 percentage points during the period 1Q2024. The company's comprehensive gross margin was 41.22%, down 1.58 percentage points from the previous year.
The 1Q2024 company's expense ratio for the period was 29.06%, down 0.47 percentage points from the previous year. Among them, the sales/management/finance expense ratios were 13.34%/15.21%/0.51%, respectively, with a year-on-year change of +0.07/ +1.21/-1.76 percentage points, respectively.
Carry out various themed marketing activities, and strengthen department store transformation 1Q2024. The company and its various business formats and stores actively expand sales and efficiency. The company launched the first unified theme marketing “Longteng Fu Yue” in the new year; planned joint cross-border cooperation, cooperated with the well-known Guoman-themed IP “My Dad is a Dragon”, and launched various themed marketing activities such as the New Year Consumer Season series at 78 stores in 36 cities. In terms of the taxable business, the company's Ole and shopping center businesses showed strong operational resilience, and the recovery was clearly better than the department store business. Based on factors such as the regional environment and consumer habits, the company adopted a store-by-store policy to implement transformation and adjustment of department stores. The operating performance of some stores that have completed the transformation has improved. In the future, the company will further step up the transformation and adjustment of department stores. In terms of the duty-free business, the company's outlying islands duty-free shop Wangfujing International Duty Free Port all recorded record sales and passenger traffic in the first quarter. 1Q2024 revenue increased 81% year on year, and passenger flow increased 33% year on year.
On April 18, 2024, the company reviewed and passed the “Proposal on a Plan to Repurchase Shares through Centralized Auction Transactions”, which plans to buy back the company's issued RMB common shares (A shares) through centralized bidding transactions.
The share repurchase amount is not less than RMB 10,000 million, not more than RMB 20,000 (all including capital), and the share repurchase price is not higher than RMB 17.50 per share (inclusive).
Lower profit forecasts and maintain “buy” ratings
The company's performance fell short of our previous expectations, mainly because the company's new business format and new stores are still in the cultivation period, and the revenue increase is not enough to cover relatively fixed costs and expenses. In addition, long-term lease high-rent projects were greatly affected by the new leasing guidelines in the early stages of leasing, which had a certain impact on the company's profits. In view of the uncertainty about the company's future revenue growth rate of new stores and the effects of the transformation of the department store business format, we lowered our 2024/2025/2026 EPS forecast by 17%/21%/24% to 0.59/0.64/0.68 yuan. The company actively carries out various marketing activities, promotes the deep integration of “tax+tax exempt”, and maintains a “buy” rating.
Risk warning: The progress of duty-free business fell short of expectations, store integration fell short of expectations, and the consumer recovery process fell short of expectations.