The company's business performance grew steadily in 2023, and the 2024Q1 profit growth rate was impressive. The company released annual and quarterly reports: in 2023, it achieved revenue of 56.364 billion yuan (+19.6% year over year, same below), net profit to mother of 973 million yuan (+27.2%); 2024Q1 revenue of 18.255 billion yuan (+13.1%), and net profit to mother of 363 million yuan (+21.1%); in addition, the announcement plans to distribute a discovery dividend of 4.50 yuan for every 10 shares. We believe that as a national brand, the company's entire industry chain layout further builds competitive advantage in the gold category, and is deeply tied to the provincial generation, which is expected to promote continuous growth. We keep the company's 2024-2025 profit forecast unchanged and add the 2026 profit forecast. We expect net profit to be 11.99/13.88/1,596 billion yuan for 2024-2026, corresponding EPS of 0.71/0.83/0.95 yuan, and the current stock price corresponding to PE is 15.9/13.7/11.9 times, maintaining a “buy” rating.
Seizing the booming opportunities in the gold category to achieve growth, and the profitability was rising, the company achieved revenue of 554.9/3.6/1.1/0.8 billion yuan in 2023, respectively, or +20.1%/-26.5%/+40.7%/-10.3%; by channel, the company's direct sales/distribution achieved revenue of 32.94 billion yuan in 2023, +15.4%/+26.1%. In terms of profitability, the company's comprehensive gross margin in 2023 was 4.1% (+0.2pct), and the sales/management/finance expense ratios were 0.9%/0.3%/0%, respectively. 2024Q1, the company took advantage of the high boom in the gold category to achieve growth; the comprehensive gross margin was 4.1% (+0.1pct), and the sales/management/financial expenses ratio was 0.7%/0.2%/0.1%, respectively. Overall profitability increased steadily, mainly due to the outstanding scale effect and improved product strength.
The channel side is deeply cultivating and consolidating the basic market and vigorously implementing the specialization strategy (1) channel: in 2023, the company added 615 stores, and the total number of stores reached 4,257 at the end of the period, and the rate of channel expansion increased significantly; the main sales channels continued to cultivate and strive for excellence to consolidate the basic business performance market.
(2) Product: Joint innovation and cross-border cooperation to enhance product strength; develop the leading ability of the “Product Leading Group” to cultivate one's own design team, enrich its own IP culture, drive the industrial chain, and revitalize the value chain.
(3) Brand: Brand management achieves clear marks, system operation, and increases gold content. Make good use of the national team's high-end resources, extend brand promotion offline, promote it to the front line of the market, and accelerate the creation of three-dimensional brand communication.
(4) Emerging businesses: Deepen industrial chain collaboration by cultivating emerging businesses such as diamonds, and cultivate more new quality productivity.
Risk warning: increased market competition; fluctuating gold prices; new products falling short of expectations; risks associated with regulatory interviews.