Core views
In 2023, the company achieved operating income of 5.9 billion yuan, +33.56% year over year; realized net profit of 333 million yuan, +67.41% year over year; realized net profit without deduction to mother of 306 million yuan, +71.93% year over year. With 2024Q1, the company achieved operating income of 1,796 million yuan, +17.87% year over year; realized net profit of 131 million yuan, +5.47% year over year; realized net profit of 119 million yuan after deduction, +5.37% year over year. The company continues to increase its efforts to expand its stores through franchises. In 2023, the company increased its net number of stores by 291, and the number of franchised stores showed an accelerated expansion trend. The company plans to net increase the number of affiliate stores by more than 300 in 2024 and reach 2,000 stores by 2025. There is plenty of room for the company's store expansion in the future.
occurrences
In 2023, the company achieved operating income of 5.9 billion yuan, +33.56% year over year; realized net profit of 333 million yuan, +67.41% year over year; realized net profit without deduction to mother of 306 million yuan, +71.93% year over year. With 2023Q4, the company achieved operating income of 1,401 billion yuan, +35.14% year over year; realized net profit of 0.2 billion yuan, turning a year-on-year loss into a profit; realized net profit of -0.2 billion yuan after deduction, compared to -51 billion yuan in the same period last year. With 2024Q1, the company achieved operating income of 1,796 million yuan, +17.87% year over year; realized net profit of 131 million yuan, +5.47% year over year; realized net profit of 119 million yuan after deduction, +5.37% year over year.
Brief review
The recovery in consumption has led to a high increase in the company's performance, and the boom is expected to continue
In 2023, the fashion jewelry, traditional gold jewelry, and leather goods businesses achieved revenue of 2,989 billion yuan, 2,265 million yuan, and 371 million yuan respectively, up 20.43%, 56.75%, and 14.41% year-on-year respectively. The main category of gold is still growing rapidly.
Benefiting from a recovery in gold and jewellery consumption, the company achieved rapid growth in 2023. Despite the high base effect, 2024Q1's performance still achieved positive growth, which was higher than the 4.5% growth rate of Gold and Jewelry Club during the same period. In addition, the company has calculated goodwill impairment provisions of 394.326 million yuan, which will have a certain impact on profits in 2023.
Strengthen the operation of “Guochao”, enhance product capabilities and strengthen marketing capabilities. In 2023, the company launched products such as “Flower Silk Fengyu Bridge”, “Flower Silk Yunqi”, “Flower Silk Complete”, “You Long Teng Yun”, “Bamboo Bamboo”, “Diversified” and “Treasure Collection”. In terms of marketing, the company held the “Jilan Gold Painting · Intangible Heritage Filigree Art Space” press conference to upgrade the brand's intangible heritage filigree visual image and create an immersive intangible heritage filigree aesthetic experience. In terms of brand building, Chao Hongji and independent designer JACQUES WEI released an intangible heritage filigree crossover concept model.
The number of stores is expanding at an accelerated pace, and store efficiency is growing rapidly. The company continues to increase its efforts to expand its stores through franchises. The company's net increase of 291 stores was 291 in the full year of 2023, compared to 123 in the same period in 2022. The number of the company's franchised stores showed an accelerated expansion trend. In 2024, the company plans to increase the net number of affiliate stores by more than 300.
The company has set a goal of reaching 2000 stores by 2025. By the end of 2023, the number of franchised stores was 1,125, and the total number of stores was 1,399. There is plenty of room for the company's store expansion in the future. For directly-managed stores, the company focuses on improving the quality of stores and reducing a certain quantity. At the same time as channel adjustments, the quality of the company's stores continued to improve. The single-store revenue of franchised stores increased 32% year-on-year, and the single-store revenue of directly-managed stores also increased rapidly by 32%.
Investment advice: The company's net profit from 2024 to 2026 is estimated to be 387, 4.35, and 482 million yuan, respectively, corresponding to PE of 14, 13, and 11 times, respectively, maintaining the “increase in holdings” rating.
Risk analysis
1. The company's products are high-end consumer goods, which are influenced by residents' purchasing power and willingness to spend. Therefore, changes in the economy and market environment will bring business risks, and a decline in residents' marginal consumption tendencies will reduce optional consumption expenses.
2. Recently, international trade frictions and disputes have increased, and events such as the pace of the Fed's interest rate hike have affected the price of gold. Fluctuations in gold prices have brought uncertainty to domestic precious metal jewelry consumption.
3. Increased competition in the industry has led to a decline in profitability. Due to the rapid recovery in consumer demand for jewelry, major jewelry brands may increase their store expansion efforts to seize market share. If competition intensifies further, the overall profit level of the industry may decline.