Introduction to this report:
The performance is in line with expectations, and the gold category remains strong; the company's exhibition and sales are strong, franchise policies are optimized, and channel expansion can be expected to continue to grow.
Key points of investment:
The performance was in line with expectations, and the rating was “increased”. Considering that K Gold Jewelry is under some pressure, the company's EPS in 2024-2025 was lowered to 0.72/0.86 yuan (original value 0.78/0.93 yuan), added an estimated EPS of 1.04 yuan in 2026, 20 times PE was given in 2024, and the target price was lowered to 14.40 yuan (original value 15.36 yuan) to maintain the “gain” rating.
Performance summary: In 2023, we achieved revenue of 56.364 billion yuan/yoy +19.61%, net profit of 973 million yuan/yoy +27.20%, net profit of 881 million yuan/yoy +26.81%; 2024Q1 achieved revenue of 18.251 billion yuan/yoy +13.08%, net profit of 363 million yuan/yoy +21.09%, net profit of non-return mother of 369 million yuan/yoy +33.21%. Overall, it was in line with expectations. The relatively rapid growth in performance was mainly due to a boost in the upward trend in gold prices, and the gold category continued to be booming.
Profit margins have been rising steadily, and expense ratios have remained stable. 2024Q1 Company's gross profit margin was 4.09% /+0.10pct, net profit margin 2.02% /+0.31pct, period expense ratio 0.99% /+0.05pct, sales/management/R&D/finance expense ratios changed year-on-year by +0.07pct/-0.03pct/-0.03pct/+0.03pct to 0.70%/0.20%/0.02%/0.07%, respectively.
Expanding stores are rapidly expanding, and the gold category is booming. In 2023, the company opened 998 new stores, a total net increase of 615 (2 direct-run, +617 franchisees); 2024Q1 added a total of 8 stores (+8 franchisees). 2024Q1 Gold and Jewelry achieved revenue of 18.30 billion yuan/ +12.8%, service fee revenue of 34 million yuan/ +299.5%; the exhibition opened up production base supply chain resources and national terminal channels to improve management efficiency; the new “three exemptions and two reduction” franchise fee policy increased support for service centers and franchisees, and it can be expected that franchisees will continue to grow.
Risk warning: Risks such as fluctuations in international gold prices and increased market competition.