Introduction to this report:

Ole has shown structural advantages, and consumer demand has yet to pick up.

Key points of investment:

The recommended investment performance was in line with expectations. The company's 2024-2026 EPS was 0.28, 0.36, and 0.48 yuan, respectively. Referring to the valuation of comparable companies in the same industry, 37xPE was given in 2024, which was higher than the industry average, maintained a target price of 10.51 yuan, and maintained an increase in holdings rating.

Performance summary: 2024Q1 revenue of 8.829 billion yuan/year on year -6.99%, net profit to mother 193 million yuan/-7.73% year on year, net profit excluding net profit of 152 million yuan/year on year -16.17%. 2024Q1 gross profit margin 24.6% /y-0.4 pct/month-on-month -2.8 pct, sales expense ratio 13.4% /y-0.0pct/month-on-month -4.6pct, management expense ratio 6.1% /year-to-year +0.1 pct/month-on-month -2.1pct.

Revenue from department stores and large supermarkets declined year on year, and Olay's business performance was relatively good. ① By business format:

2024Q1 department store/shopping center/outlet/supermarket/convenience store/hypermarket/specialty retail sales were -10.70%/-1.63%/+2.02%/+1.53%/-2.51%/-16.83%/-14.41%, respectively, with gross margins -5.45%/-1.07%/-0.13%/-1.9%/-0.87% /+0.21/ +3.04%; ② By region: North China/Northeast China/East China/Central China/South China/Southwest China, respectively, +3.37% year-on-year /-2.85%/-7.22%/-13.38%/-7.35%/+7.25%

Accelerate transformation and empowerment, and explore business growth. ① Adopt various flexible investment cooperation models such as asset-light, mergers and acquisitions, and self-construction to promote the development of premium Ole and urban Ole products; ② The shopping center focuses on high-quality projects in the core development axis of Yangtze River Delta cities, and relies on pre-REITS funds to expand business growth through mergers and acquisitions; ③ explore the development of Bailian ZX's innovative business format, and explore model replication and modular implantation.

Risk warning: Consumer demand is weak, store expansion falls short of expectations, and industry competition intensifies.