In 2023, revenue increased 34%, net profit to mother increased 67%, and overall performance was in line with expectations.
The company's revenue in 2023 was 33.6% to 5.9 billion yuan, gross margin was -4.1 pcts to 26.1% year on year. The decline in gross margin was mainly due to changes in channel structure and product structure. The sales expense ratio was -3.5 pcts to 14% year over year, management fee ratio was basically flat at 2.1% year on year, and the R&D cost ratio was -0.3 pcts to 1.1% year over year. During the period, the company calculated goodwill impairment of about 40 million yuan for the same period of 2022. In summary, the net profit margin increased year on year 1.1 pcts reached 5.7%, and net profit to mother increased 67.4% year over year to 330 million yuan. The overall performance was in line with expectations. The company announced that the cash dividend was about 220 million yuan, and the dividend payment rate was 67%. Based on the closing market value on April 26, the dividend rate was 4%, maintaining a high dividend level.
The company released its 2024Q1 quarterly report, and net profit to mother increased steadily by 5.5%. Revenue increased 17.9% year over year to 1.8 billion yuan, gross margin decreased by 3.1 pcts to 24.9% year on year, sales expense ratio decreased by 2.2 pcts year on year to 11.4% year on year, management expense ratio increased 0.5 pcts year on year to 1.8% year on year, R&D expenses remained flat at 0.9% year on year. Overall, net profit to mother decreased by 0.9 pcts year on year to 7.3% year on year, and net profit to mother increased 5.5% to 130 million yuan year on year. On a relatively high basis, the company's performance still achieved steady growth.
By channel: 1) Self-management: Store structure adjustment, store efficiency drives revenue scale expansion. In 2023, the company's self-operated channel revenue increased 14.53% year on year to 3.26 billion yuan (of which online sales increased 14.84% year on year). We determined that the expansion of the revenue scale of offline self-operated channels was mainly driven by the increase in store efficiency. By the end of 2023, the number of self-operated stores in the company's jewelry business was 274, with a net closure of 50. We expect some self-operated stores to operate under a franchise model during the period. Looking forward to 2024, we expect the number of self-operated channel stores to remain basically stable. . In 2023, the gross margin of the company's self-operated channels fell 2.43 pcts year on year to 31.67%. We determine that the decline in gross margin was mainly due to the increase in the share of low-gross terminal gross margin in gram heavy gold sales during the period.
2) Agents: Franchise stores continue to expand, and the business is growing rapidly. In 2023, franchise business revenue increased sharply by 67.52% year on year to 2.48 billion yuan, and gross margin decreased 3.86 pcts to 19.8% year on year. The sharp expansion in the scale of franchise business was partly due to an increase in the number of franchise agent stores. By the end of 2023, the number of franchise stores had a net year-on-year increase of 291 to 1125, an increase of 35%. The company promoted the increase in the number of franchise stores to increase market share. At the same time, the company's products focused on young fashion customers, gradually increasing the proportion of gold products and product market acceptance High. Strong terminal sales are driving franchisees' increase in single-store deliveries.
By product: 1) Jewelry business: The traditional gold business has impressive sales, and product strength continues to improve.
In 2023, the company's fashion jewelry business revenue increased 20.43% year-on-year to 2.99 billion yuan. The company continued to enrich the filigree intangible heritage product matrix, while using Xiaohongshu, Douyin, etc. for brand promotion, and Chaohongji's market influence continued to increase; in 2023, in the context of rising gold price fluctuations, consumers preferred traditional gram heavy gold jewelry due to the need for safe haven and value preservation, so the revenue growth rate of the traditional gold business was significantly faster than fashion jewelry. 2) Leather goods business: Revenue is growing steadily, and fluctuations are recovering. In 2023, the company's leather goods business revenue increased 14.41% year-on-year to 370 million yuan, showing an overall fluctuating recovery trend. From a profit perspective, in 2023, due to prudential considerations, the company calculated goodwill impairment of about 40 million yuan against Fianne Co., Ltd., compared to 80 million yuan for the same period in 2022.
Inventory turnover increased, and overall operating conditions were steady. In 2023/2024Q1, the company's inventory turnover days were -94/-33 days to 221/186 days year on year. We determined that the increase in the company's share of franchise business led to an increase in inventory turnover efficiency. The number of accounts receivable turnover days was -3/-2 days to 17/17 days; in 2023, the company's net operating cash flow increased 48.6% year on year to 620 million yuan; 2024Q1 net operating cash flow increased 2.5% year on year to 120 million yuan. The overall operating situation of the company is relatively stable.
We expect the company's performance to grow rapidly in 2024. Short-term terminal jewelry consumption has maintained a steady trend overall, laying the foundation for the growth of single-store sales through the company's direct channels and the expansion of single-store delivery in the franchise business. At the same time, the company's franchise channel will maintain a relatively rapid pace of store expansion. Taken together, we expect the company's revenue to grow 17% and performance to increase 19% in 2024.
Profit prediction and investment advice: The company's channel strategy transformation in 2019 opened up room for growth, while product design capabilities continued to improve, leading the industry in digital efficiency. Taking into account the potential risk of loss of goodwill in women's clothing, we predict that the company's net profit due to mother in 2024-2026 will be 3.9 million yuan, 464, 539 million yuan. The current stock price corresponds to 2024 PE 14 times, maintaining the “gain” rating.
Risk warning: Risk of fluctuations in the consumption environment, risk of gold price fluctuations, increased risk of market competition.