The company achieved operating income of 5.9 billion yuan in 2023, an increase of 33.6% over the previous year, and achieved net profit of 330 million yuan to mother, an increase of 67.4% over the previous year. 24Q1's revenue and net profit to mother increased by 17.9% and 5.5%, respectively. The company plans to pay a dividend of 220 million, with a dividend rate of 66.6%.
High growth in the gold category led to high revenue growth. By product, revenue from fashion jewelry, traditional gold, and leather goods increased by 20.4%, 56.7%, and 14.4% respectively in 2023. By channel, revenue from proprietary, agency and wholesale businesses increased by 14.5%, 67.5%, and 57.6% year-on-year in 2023.
The store is expanding steadily. The company opened 241 net stores in 2023, of which 50 self-operated and franchised stores were net closed and 291 were net opened, respectively. We believe that at present, the company's channel scale still has a lot of room for growth. In 2024, the company plans to net more than 300 new franchisees. It is expected that through flexible regional policies and benchmark store construction, it will further achieve breakthroughs in growth zones and empty areas on the basis of consolidating the scale of mature regions. At the same time, the company has also set a mid-term goal of reaching 2,000 stores by 2025.
The women's bag business still faces certain challenges. In 2023, the company's women's bag business calculated goodwill depreciation of 39.43 million yuan. Chao Hongji International (the actual operator of women's bags) lost 25.2 million yuan throughout the year, and the women's bag business is under pressure in the short term. Despite this, FION officially launched a brand image upgrade in 2023 and launched the first Qiaojiangfang Art Flagship Store to display craftsmanship up close on the user side. Through new multi-faceted experience models such as art curation, interactive workshop creation, retail shopping, and catering integration, it deepens the brand connotation, consolidates the brand mentality of focusing on craftsmanship, and continues to enhance the brand reputation.
We are optimistic about the company's more differentiated brand/product positioning compared to its peers (in line with the consumer trend of young people, and the products are relatively more fashionable) and the current small channel and sales scale base. Considering sufficient space to open stores in the future, we are optimistic about the company's medium- to long-term growth. At the same time, we also look forward to a steady recovery in the women's bag business in the future.
According to the annual report and quarterly report, we adjusted the profit forecast and introduced the 2026 profit forecast. The company's earnings per share for 2024-2026 are 0.48, 0.59, and 0.70 yuan respectively (the original 2024-2025 was 0.56 and 0.68 yuan). Referring to comparable companies, a PE valuation of 14 times 2024 was given, corresponding to the target price of 6.72 yuan, to maintain a “gain” rating.
Risk warning: increased competition in the industry, weakening demand for terminal consumers, the impact of fluctuations in gold prices on sales, etc.