The company's 1Q2024 revenue decreased 4.63% year on year, and net profit to mother decreased 15.07% year on April 29. On April 29, the company announced its 2024 quarterly report: 1Q2024 achieved operating income of 4.850 million yuan, a year-on-year decrease of 4.63%, and realized net profit of 435 million yuan, converted to fully diluted EPS of 0.97 yuan, a decrease of 15.07% year on year, resulting in net profit deducted from mother of 446 million yuan, a decrease of 2.74% year on year.

The company's 1Q2024 comprehensive gross margin decreased by 1.37 percentage points, and the cost ratio decreased by 1.34 percentage points during the period 1Q2024. The company's comprehensive gross margin was 28.20%, down 1.37 percentage points from the previous year.

The 1Q2024 company's expense ratio for the period was 17.87%, down 1.34 percentage points year on year. Among them, sales/management/finance/R&D expenses were 13.21%/4.23%/0.33%/0.10%, respectively, with year-on-year changes of -0.05/-0.84/-0.40/ -0.05 percentage points, respectively.

Electric performed relatively well. After completing the merger, the trading company group delivery company absorbed the merged trading company group by issuing shares to all shareholders of the trading company group. The company signed a “Delivery Agreement” on January 31, 2024, with January 31, 2024 as the delivery date. From the date of delivery, all assets, liabilities, business, personnel and all other rights and obligations of the trading company group are transferred to the company.

1Q2024 opened 1 new supermarket, 1 electric appliance, 1 auto trade, closed 1 supermarket, 1 auto trade; by the end of the first quarter of 2024, the company had a total of 281 stores, including 50 department stores, 152 supermarkets, 41 electrical appliances, and 38 auto traders. By region, the company's performance in Chongqing is superior to that of Sichuan and Hubei regions. By business type, 1Q2024's electrical appliance business in Chongqing performed well. Revenue increased 4.71% year on year, gross margin increased 0.45 percentage points year on year, and the auto trade business was under relative pressure.

On the business side, department stores and electrical appliances will deepen joint brand business plans in 2023, promote underwriting and customization, and accelerate the expansion of the online channel supply chain. Supermarkets strengthen industrial collaboration with Wumei Group to give full play to the sales advantages of top brands.

Auto trade cultivates new energy brands and seeks resources for special vehicles. In terms of management, in 2023, the company implemented organizational optimization, explored intensive management of headquarters functions, innovated flexible employment models, and increased the proportion of flexible employment.

Lower profit forecasts and maintain “buy” ratings

The company's performance fell short of our previous expectations, mainly due to the relative pressure on the company's revenue. Considering that there is still some uncertainty about the future consumption recovery process in Chongqing and other places, and competition in the industry is fierce, we lowered our forecast for the company's 2024/2025/2025/2026 net profit forecast of 4%/5% to 13.51/14.32/1,506 billion yuan.

The company's different business formats continue to optimize development strategies, continuously optimize the management structure, and maintain a “buy” rating.

Risk warning: The development of the Internet finance business fell short of expectations, competition in the industry intensified, and store expansion fell short of expectations.