Incident Overview
The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 16.552 billion yuan/ +50.61%, net profit of 707 million yuan/ +53.61%, net profit of 658 million yuan/ +62.18%, falling within the previous performance forecast range, in line with market expectations; the company plans to distribute 7 yuan (tax included) to all shareholders for every 10 shares. The dividend payment rate reached 77%, and the current stock price (closing price of $13.96 on April 26) corresponds to a dividend rate of 5%. With 2024Q1, the company achieved revenue of 6.316 billion yuan/ +25.01%, net profit attributable to mother of 272 million yuan/ +16.15%, and net profit of 252 million yuan/ +17.99% after deducting non-return net profit.
Analytical judgment:
Net increase of 17 stores throughout the year, and online business grew rapidly
In 2023, the company achieved revenue of 16.552 billion yuan/ +50.61%. By product, the revenue of gold jewelry/precious metal investment products/precious metal cultural products/diamond jewelry was 61.59/88.84/11.09/214 million yuan, respectively, +54.11%/+55.79%/+18.41%/+0.07% year-on-year; in 2023, the company signed cooperation agreements with the National Museum of China and Beihai Park to develop gold and jewelry products rich in outstanding traditional Chinese culture. By channel, in 2023, the company's offline/online/banking channels achieved revenue of 133.11/30.17/210 billion yuan, respectively, and +42.60%/+105.10%/+20.31% year-on-year respectively, and the share of online business further increased to 18%; the company actively expanded sales channels, adding a net increase of 17 direct-run stores throughout the year (19 newly opened and 2 closed), consolidating the sales scale of existing online stores and strengthening the live streaming business. Sales of short video platforms increased significantly, and multi-channel linkage formed an increase in performance.
Gross margin declined year-on-year, and cost control was excellent
In 2023, the company's net profit margin was 4.29% /+0.10pct, with a gross profit margin of 10.68%/-0.54pct. Among them, the gross margins of gold jewelry/precious metal investment products/precious metal cultural products/diamond jewellery were 17.85%/2.79%/14.16%/39.52%, respectively, -0.44pct/-0.01pct/+1.47pct/-3.59pct, respectively. On the cost side, in 2023, the company's sales expenses ratio is 2.62% /-0.58pct, management expenses ratio 0.68% /-0.23pct, financial expenses ratio 0.19% /+0.02pct, R&D expenses rate 0.05% /-0.04pct.
24Q1 performance continues to grow rapidly
2024Q1, gold consumption continued to be booming, driving the company's revenue +25.01%; the company's net profit margin was 4.33% /-0.34pct, including gross profit margin of 10.00% /-1.38pct, sales expenses ratio 2.26% /-0.51pct, management expenses ratio 0.56% /-0.13pct, financial expenses ratio 0.24% /-0.01pct, R&D expenses rate 0.04% /-0.02pct. 2024Q1, the company added 1 new direct-run store and closed 2; by the end of the first quarter, the company had 86 direct-run stores.
Investment advice
We adjusted 2024-2025 and added the 2026 profit forecast. The company's revenue for 2024-2026 is estimated to be RMB 201.29/226.60/25,184 billion yuan respectively (the original forecast was RMB 201.36/22.753 billion yuan for 2024-2025, respectively), and net profit to the mother will be RMB 8.25/9.29/ RMB 1,049 million (the original forecast was RMB 842/933 million for 2024-2025, respectively), and EPS of RMB 1.06/1.19/1.35, respectively ( The original forecast was 1.08/1.20 yuan for 2024-2025), and the closing price on April 26 (13.96 yuan) corresponds to PE 13/12/10 times, respectively, maintaining the “gain” rating.
Risk warning
Gold prices fluctuated greatly, industry competition intensified, and store expansion fell short of expectations.