2024Q1's performance continues to grow, optimistic about international expansion under the brand matrix, and maintains a “buy” rating
In 2023, the company achieved revenue of 3.54 billion yuan (+22.6% YoY), achieving net profit attributed/withheld from mother of 91/87 billion yuan, an increase of 25.2%/29.4%; 2024Q1 achieved revenue of 1.27 billion yuan (+17.6% year over year), and realized net profit attributed/withheld from mother of 36/350 million yuan, an increase of 20.4%/21.9%. 2024Q1's performance continues to grow, but the expense ratio has increased slightly. We have lowered the 2024-2025 and added profit forecast for 2026. We expect net profit to be 11.42/13.79/1,649 billion yuan (the value before 2024-2025 was 11.73/1.42 billion yuan), the corresponding EPS was 2.0/2.4/2.9 yuan, and the PE corresponding to the current stock price is 14.8/12.3/10.3 times. Considering the company's steady expansion & store efficiency, I am optimistic about the brand matrix Under international expansion, maintain a “buy” rating.
Building a brand matrix and moving towards internationalization, the steady expansion of various types of stores on the channel side & improving the efficiency of direct-run stores. In 2023, tops/bottoms/outerwear/other categories achieved revenue of 15.1/7.1/9.8/30 billion yuan, respectively, an increase of 19.9%/15.6%/29.0%/22.0%, respectively. The company set up an R&D center in Paris, and is optimistic that new products from K&C and CERRUTI 1881 will continue to be unveiled. By channel, in 2023, online/direct/franchise revenue was 1.9/2.92 billion yuan, +16.1%/+34.6%/-2.1%; the net increase of stores in 2023 was 64 to 1,255 compared to the beginning of the year, with a net increase of 28/36 to 607/648, respectively. (1) Store expansion: Optimistic about the continued expansion of various types of stores under the 2024 brand matrix. (2) Store efficiency: In 2023, the single-store efficiency of direct-run stores was 3.946 million yuan, an increase of 28.3% over the previous year; optimistic about VIP refined management & brand marketing, store efficiency continues to grow.
Profitability continues to improve, and operational quality performance is excellent
Profitability: 2023/2024Q1 gross margin was 78.6% (+1.2pct)/76.0% (YoY +0.3pct), with a steady increase in gross margin. The cost rate for the 2023 period was 47.7% (+1.8pct), of which the sales/management/finance/R&D expense ratio was +1.2/+0.0/ -0.5pct year on year, mainly due to increased intermediary service fees and wages; the cost rate during the 2024Q1 period was 41.3% (+0.9pct year over year), of which the sales/management/finance/R&D expense ratio was -0.2/+1.2/+0.1/-0.2pct year on year, respectively. The net profit margin for 2023/2024Q1 was 25.8% (same Compared to +0.5pct)/28.5% (+0.7pct year over year), 2024Q1 net interest rate increased steadily year on month. Operating capacity:
2024Q1 ended inventory of 640 million yuan, -1.2% year-on-year, 200 days of inventory turnover (-40 days), and the storage age structure continued to be optimized; with 26 days (+3 days) of accounts receivable turnover, the net operating cash flow of 2024Q1 increased 7.3% to 540 million yuan, with sufficient capital.
Risk warning: Store expansion falls short of expectations, e-commerce competition intensifies, and new brand development falls short of expectations.