The company released its 2023 annual report and 2024 quarterly report on April 26. The full year of 2023 achieved revenue of 3,536 billion yuan, an increase of 22.58%, and net profit to mother of 911 million yuan, an increase of 25.17%. After deducting non-net profit of 867 million yuan, an increase of 29.36%. 23Q1 revenue was 1,268 billion yuan, up 17.55%; net profit attributable to mother was 362 million yuan, up 20.43%; net profit after deducting non-net profit of 351 million yuan, up 21.87%. The company's revenue and performance continued to increase. The profit level continued to increase. The profit level continued to grow. We are optimistic about the company's growth and maintain the purchase rating.
Key points to support ratings
Channel expansion+precision marketing drive rapid growth online and offline. For the full year of 2023, the company achieved revenue of 3,536 billion yuan, an increase of 22.58%, and net profit to mother of 911 million yuan, an increase of 25.17%. It maintained rapid growth against the backdrop of weak recovery in domestic demand, demonstrating the strong growth momentum of the brand. By channel, direct channel revenue was 2,395 billion yuan, an increase of 34.55%. The company grasped the domestic high-end sports market, continued to focus on improving brand power, creating high-quality differentiated products, and continued to expand the number of stores. The net increase of direct-run stores was 28 to 607, maintaining a steady pace of expansion. Franchise channel revenue was 918 million yuan, a year-on-year decrease of 2.07%, and the number of franchise channel stores also increased by 36 to 648. On the online side, the company actively deployed major e-commerce platforms, increased advertising, and implemented precise marketing strategies to drive revenue growth of 16.08% to 195 million yuan.
The 24Q1 revenue performance maintained a high growth rate, highlighting the strong growth momentum of the brand. 24Q1 achieved revenue of 1,268 billion yuan, an increase of 17.55%, and net profit to mother of 362 million yuan, an increase of 20.43%. Currently, domestic demand is still in a weak recovery process, and the company's revenue performance has maintained a high growth rate, demonstrating strong brand and product strength.
Profitability is still on the rise, and cash flow is growing steadily. The company focuses on upgrading the product structure and continuously launches competitive new products. Product prices have moved upward, and gross margin/net margin increased by 1.21pct/0.54pct to 78.61%/25.76% in 2023. 24Q1's profitability continued to improve, and gross margin/net margin increased by 0.32pct/0.68pct year-on-year to 76.03%/28.55%. The company's overall expense ratio remains stable. The number of inventory turnover days dropped by 40 to 200 days in 24Q1. The company strengthened its supply chain management capabilities and continued to optimize inventory turnover efficiency. Operating cash flow increased 7.34% to $544 million in 24Q1, with a net present ratio of 1.50. The cash flow situation was good.
Product and channel optimization+continuous improvement of brand power, there is still plenty of room for growth in the future. Starting from its own category advantages, the company embarked on a category-guided brand development strategy, continued to step up scientific and technological innovation and patent research and development efforts, and create internationally competitive products. The company adheres to the light luxury brand positioning, cultivates a young consumer base with a multi-channel layout, enhances brand influence, and creates a diversified brand matrix through the acquisition of international luxury brands to further enrich product styles and open up market space. At the same time, expand independent golf stores to create a multi-dimensional growth curve. There is still plenty of room for growth in the future, and we expect continued high growth in performance.
valuations
Under current share capital, we expect EPS to be 2.08/2.47/2.93 yuan from 2024 to 2026, respectively; PE will be 14/12/10 times, respectively, maintaining the purchase rating.
The main risks faced by ratings
Channel expansion fell short of expectations, consumption recovery fell short of expectations, and new brand operations fell short of expectations.