Key points of investment:
Net profit due to mother increased by 30.23%/12.00% in 23/24Q1, and dividends increased.
In '23, the company achieved revenue of 71,436 billion yuan/ +13.37%, gross profit margin of 8.30% /+0.72pct, and net profit to mother of 2,214 billion yuan/ +30.23%. Looking at the single quarter split, 23Q4 achieved revenue of 9.370 billion yuan/ -1.08%, gross profit margin of 9.48% /+0.38pct, and net profit to mother of 250 million yuan/ -27.41%. 24Q1 achieved revenue of 25.630 billion yuan/ +4.36%, gross profit margin of 8.37% /+0.35pct, and net profit to mother of 802 million yuan/ +12.00%. According to the announcement, the company plans to distribute 19.5 yuan for every 10 shares, further increasing the dividend of 14.6 yuan for every 10 shares in '22.
In '23, a net of 392 franchise stores were opened, and the gross margin of the retail business increased.
By the end of '23, Laofengxiang had opened 385 stores, and the total number of stores reached 5,994, including 187 self-operated stores (7 net closed) and 5,807 franchised stores (392 net stores), promoting models such as webcasts, talent visits, and member malls. The company's wholesale/retail model revenue was 543.04/4.114 billion yuan, an increase of 14.35%/29.40%, achieving a gross profit margin of 8.93%/22.91%, with the same increase of 0.27/5.02pct.
The jewelry is a ballast stone, and the performance is excellent.
By product, pen/jewelry/handicraft sales revenue was 2.24/581.36/0.58 billion yuan, compared with 3.66%/15.44%/-37.16%, and gross margins were 25.47%/9.84%/23.73%, respectively, compared to -5.28/0.71/6.23pct. Gold trading also increased 5.53% to 12.750 billion yuan. The company grasped the hot spots of the national trend and launched themed products such as “Dragon Love Honey” and “Frontier”.
The cost side is stable, and the net interest rate has increased.
In 23 years, the sales/management/finance/R&D expense ratio was 1.48%/0.69%/0.20%/0.05%, compared with 0.16/0.05/-0.13/0.00pct. The increase in the sales expense ratio was due to an increase in sales staff wages, social security and welfare expenses. The 24Q1 sales/management/finance/R&D expense ratio was 1.25%/0.49%/0.23%/0.04%, -0.17/-0.11/-0.02/0.01pct year on year. The overall cost control was good. 23 and Q1 24 achieved net profit margins of 4.17%/4.11% respectively, +0.57/+0.22pct year on year.
The company's shares were sorted out, and 13 companies transferred 21.99% of Gongmei's non-state-owned shares. Under the three-year action plan target framework and the promotion of the Double Hundred Action Plan, the company announced a 24-year budget target, with revenue of 750.07 billion yuan/ +5.00%, total profit of 4.138 billion yuan/ +4.00%, net profit of 2.304 billion yuan/ +4.04%, and no less than 300 new stores and distribution outlets (counters) throughout the year.
Profit forecasting and investment advice
According to the company's guidelines, combined with the sharp rise in gold prices, terminal consumer wait-and-see sentiment increased. We adjusted our profit forecast. The company's revenue for 2024-2026 is 790.34/869.88/94.612 billion yuan (the previous value was 837.97/94.812 billion yuan). Due to the transmission of rising gold prices, we raised our profit forecast, and the net profit to the mother for 24-26 is 25.65/2,925/3.201 billion yuan (2,90/2,891 billion yuan in the previous 24-25 years). The current price corresponds to the 24/25 PE16/14x, maintaining a “buy” rating.
Risk warning
The risk of increased competition, the risk of channel expansion falling short of expectations, the risk of significant short-term fluctuations in gold prices, and the risk of internal management changes