Key points of investment:
The company released its report for the first quarter of 2024, and the results were in line with expectations. According to the company announcement, 24Q1 achieved operating income of 4.850 million yuan, -4.63% year-on-year, and realized net profit of 435 million yuan, or -15.07% year-on-year. Mainly affected by quarterly statistical calibrations adjustments after the absorption and merger of Chongqing Trading Company, net profit after deduction of non-return mother was 446 million yuan, or -2.74% year-on-year. Of these, 24Q1 non-recurring profit and loss was 53.73 million yuan, before the adjustment, due mainly to changes in the price of Dengkang Dental shares held by the company, and subsequent changes in the price of Dengkang Dental shares held by the company. Expected The impact will gradually narrow.
The multi-business layout remains stable, and the business area focuses on the Sichuan and Chongqing regions. According to the company's announcement, 24Q1 operates 281 offline stores according to the business format. The total number of supermarkets in Hubei was closed. The total number of stores was the same as at the beginning of the year, and the area increased to 2.1934 million square meters. The department store/supermarket/electrical/automobile trade business had 50/152/41/38 stores, all of which were the same as at the beginning of the year, achieving revenue of 7.71/19.86/7.90/ 1.25 billion yuan, respectively. Looking at the subregion, Chongqing/Sichuan/Hubei achieved revenue of 4.746/1.01/0.03 billion yuan respectively, or -4.3%/-13.2%/-74.4% year-on-year. The sharp decline in revenue in Hubei is expected to be mainly affected by store closures.
The gross margin decreased slightly, and the ability to control expenses was good. According to the company's announcement, the company's comprehensive gross margin in 24Q1 was 28.20%, -1.37pct year-on-year. By business type, the gross margin of the department store/ supermarket/ electrical/ auto trade business was 72.98%/27.77%/19.22%/6.18%, respectively. The cost rate for the 24Q1 period was 17.87%, -1.34pct year on year. All expenses were lower than the same period last year. Among them, the sales/management/ financial/ R&D expenses ratio was 13.21%/4.23%/0.33%/0.10%, -0.05pct/-0.05pct year-on-year, respectively, and the company's cost control capacity improved.
Integrating superior resources, diversified marketing results are remarkable. According to the company's official account, since this year, the company has launched diversified marketing activities to attract consumers with remarkable results and meet the diverse needs of consumers. In 2024, the live broadcast of the “Zhongbai New Century New Year's Goods Festival” achieved sales of nearly 40 million yuan. During the Spring Festival, the department store industry's “Chinese New Year” themed event drove consumption of 530 million yuan. The supermarket business carried out high-frequency New Year promotions to drive continued growth in sales of festive products. New Century Supermarket's “4.12 Family and Friends Group Buying Fair” joined forces with major brand suppliers and manufacturers to provide consumers with sufficient preferential consumption experience, achieving sales of 300 million yuan in 3 days.
Maintain a buy rating. The company's scale advantage in the Sichuan and Chongqing region continues to show. Department stores, supermarkets, electrical appliances, and automobile trade are innovating and collaborating in multiple business formats, accurately understanding consumer demand to build six core competencies, while optimizing the internal governance structure. They are optimistic about the long-term growth of the main business, and Ma Shao continues to innovate and increase the company's profits. We maintained the company's net profit for 24-26 at 1,436/15.65/1,735 billion yuan respectively, corresponding to PE of 8/8/7 times, and maintained the purchase rating.
Risk warning: Consumer finance growth falls short of expectations; industry competition intensifies; business development falls short of expectations