Incident Overview
24Q1 The company's revenue/net profit attributable to mothers/net profit from operations were $31.39/3.46/3.38/ $834 million, up 4.58%/11.40%/15.55%/114.18% year-on-year; net profit growth was better than the increase in gross margin, excluding asset impairment and credit impairment losses of $116 million (23Q1 total of $66 million), government subsidies of $0.04 billion (23Q1 was $11 million) and income from fair value changes in financial assets and liabilities Net profit due to mother after yuan (23Q1 was $08 billion) was 454 million yuan in 24Q1, an increase of 26.9% over the previous year. The increase in operating cash flow was mainly due to an increase in payment received from current sales and a decrease in payment payments. It is mainly income from changes in fair value of financial assets and liabilities, capital usage fees charged to credit franchisees, and government subsidies.
Analytical judgment:
Gross margin increased, and the increase in net profit margin was less than gross margin, mainly due to asset impairment losses and increased sales expenses. In 24Q1, the company's gross margin, net profit margin, net profit margin after deduction was 46.63%/11.0%/10.8%, up 2.29/0.68/1.02PCT year-on-year. Sales/management/R&D/finance expense ratios were 24.47%/4.38%/1.48%/-2.07% respectively, up 1.07/0.10/0.12/-1.14PCT year-on-year. Among them, the decline in financial expense ratios was mainly due to an increase in interest income from time deposits. Taxes and surcharges accounted for 0.60%, down 0.38 PCT year on year, mainly due to the reduction in urban maintenance and construction tax and education fee surcharges in the current period; asset impairment losses accounted for 3.67%, up 0.96 PCT year on year, mainly due to increased inventory price drop preparations; credit impairment losses were 0.03%, up 0.54 PCT year on year, mainly due to the increase in accounts receivable balances; net income from fair value changes accounted for 0.15%, a decrease of 0.11 PCT year on year, and income tax/revenue was 3.33%, a decrease of 0.12 PCT year on year.
Inventory has improved markedly. At the end of 24Q1, the company's inventory was 2,586 billion yuan, a year-on-year decrease of 23.3%. The number of inventory turnover days was 143 days, a year-on-year decrease of 51 days. The company's accounts receivable were 1,021 billion yuan, up 30.4% year on year. The number of accounts receivable turnover days was 34 days, up 3 days year on year. The company's accounts payable was 1,452 billion yuan, a year-on-year decrease of 2.8%. The number of payable turnover days was 89 days, an increase of 2 days over the previous year.
Investment advice
We analyzed (1) In the casual wear business, the company's overall positioning is “New Semma” to provide families with a full-scene shopping experience including adult clothing, children's clothing, and shoe accessories; creating Semma memory items, iterating mental products, and increasing the head contribution rate, which is expected to successfully create large products to drive sales growth.
(2) Looking ahead, the 23-year corporate discount strategy will have an impact on revenue growth. The pursuit of revenue scale is expected to increase in 24, and revenue growth is expected to accelerate; future revenue growth will be driven by overseas stores, PUMA and ASICS children's category agents, new retail, etc.; (3) In the future, with company fee control and online control discounts, there is still room for repair in net interest rates. Maintain the 24-26 revenue forecast of 156.24/173.03/19.180 billion yuan; maintain 24-26 net profit of 12.86/14.80/1,711 billion yuan; corresponding to 24-26 EP0.48/0.55/0.64 yuan, and the closing price on April 29, 2024 was 6.24 yuan. The corresponding PE was 13/11/10X, respectively, maintaining the “buy” rating.
Risk warning
Risk of uncertainty about the epidemic; product iteration falling short of expectations; the company's securities company received a regulatory letter from the Shenzhen Stock Exchange in November 2020 due to illegal stock sales; systemic risk.