Incident review
The company announced its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 2,226 billion yuan, an increase of 28.52%; realized net profit of 259 million yuan, an increase of 48.93%; realized net profit withheld from non-mother of 188 million yuan, an increase of 38.16%, and EPS of 0.65 yuan. It plans to distribute 5.20 yuan for every 10 shares to all shareholders. 24Q1 achieved revenue of 661 million yuan, an increase of 38.73%; realized net profit of 111 million yuan, an increase of 40.62%; realized net profit without deduction of 104 million yuan, an increase of 40.80%.
Incident reviews
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Koihi grew rapidly, and Marumi's big single products grew steadily. By brand: 1) In 2023, the Marumi brand's revenue was 1.56 billion yuan, an increase of 11.63%. GMV sales of Xiaohongbi Eye Cream and Double Collagen Small Gold Needle Retouch Essence both exceeded 200 million yuan. The performance of the big single products was outstanding, and we look forward to further growth. 2) In 2023, Lianhuo achieved revenue of 643 million yuan, an increase of 125.14%, and achieved high growth. Among them, the 5 products of Invisible Foundation, Invisible Air Cushion, Can't Smash Foundation, and Can't Remove Air Cushion all achieved sales of more than 100 million GMV; PL Invisible Foundation sold over 1.5 million units, and PL Unbreakable Foundation sold more than 1.2 million units.
Douyin is growing rapidly, and Tmall is growing against the trend, and offline pressure is under pressure. By channel: 1) In 2023, the company's online channel revenue was 1,871 billion yuan, an increase of 50.40%, accounting for 84.1%; among them, the Tmall flagship store achieved 35.62% revenue growth and Douyin achieved over 106.29% revenue growth throughout the year. At the same time, the company paid more and more attention to Xiaohongshu's cultivation, which was content-based and steadily penetrated. 2) In 2023, offline channel revenue was 354 million yuan, down 27.17%. There is still pressure under pressure under the impact of the general environment. Among them, department store channels declined due to a decrease in passenger traffic.
The gross margin continues to rise, and the increase in advertising expenses affects the sales expense ratio. The company's 23-year gross margin/ sales expense rate/ management expense ratio/ R&D expense ratio was 70.69%/53.86%/4.89%/2.80%, compared with the 22-year change rate of +2.30/+4.99/ -1.53/-0.26pct, respectively. The increase in the company's gross margin was mainly due to the increase in the share of online channels and the focus on large single product strategies. The increase in the advertising rate of 5.10pct to 42.99% led to an increase in the sales expenses rate and optimization of the management expense ratio; in addition, the revenue share of the company's revenue from changes in fair value in '23 3.19%, up 2.88pct year-on-year. Overall, the company's net profit margin for 2023 increased 1.6 pcts to 11.66%. The company's 24Q1 gross margin/sales expense ratio/management expense ratio/R&D expense ratio were 74.61%/50.29%/3.15%/2.46%, respectively, with changes of +5.93/+7.78/-1.21/-0.34pct from the same period in 23 years. The gross margin continued to be optimized and the management expense ratio decreased; overall, the company's 24Q1 net profit margin increased by 0.23 pct to 16.73%.
Profit forecast and investment advice: We adjusted the profit forecast. The company's net profit for 24-26 is estimated to be 390 million yuan/490 million yuan/60 million yuan respectively, corresponding to PE of 30 times/23 times/19 times, maintaining the purchase rating.
Risk warning:
Industry sentiment falls short of expectations; brand growth falls short of expectations; net interest rate growth falls short of expectations, etc.