Incidents:
Revenue for the full year of 2023 also increased 22.6% to 3.54 billion yuan, and net profit to mother increased 25.2% to 901 billion yuan; single Q4 revenue also increased 12.1% to 740 million yuan, and net profit to mother fell slightly to 150 million yuan; 2024Q1 revenue also increased 17.6% to 1.27 billion yuan, and net profit to mother also increased 20.4% to 360 million yuan.
Comment:
The number of terminals continued to grow at a relatively rapid pace. The company's 2023Q4/2024Q1 revenue increased 12.1%/17.6% year-on-year to 7.4/1.27 billion yuan respectively, maintaining a relatively leading scale growth rate in the context of weak consumption recovery. During the reporting period, the Biyin Levin brand focused on the core advantage category of T-shirts to create the “No. 1 Lenovo T-shirt Brand”. As of 2023, individual T-shirts have been ranked No. 1 in overall market share for six consecutive years. Furthermore, the company has further strengthened its ties with golf sports and has been the number one overall market share in the golf apparel market for seven consecutive years.
The channel is expanding steadily. By the end of 2023, there was a net increase in the number of company stores by 64 to 1,255, including 607 directly-managed stores (+28) and 648 franchised stores (+36). In 2023, sales revenue from direct-business/franchise/e-commerce channels was +34.6%/-2.1%/+16.1% year-on-year to 23.9/92/190 million yuan, respectively.
Profitability is rising steadily. In 2023, the company's gross margin increased 1.2 pct to 78.6% year over year, and 2024Q1 gross margin increased 0.3 pct to 76% year over year. On the cost side, the sales/management expense ratio increased by 1.2pct/1.1pct year-on-year to 37.1%/7.9% in 2023, and 2024Q1 remained stable at 33%/6.1%. Overall, the company's 2023/2024Q1 net interest rate increased by 0.5pct/0.7pct year-on-year to 25.8%/28.6%, respectively.
Inventory turnover efficiency has improved, and cash flow is healthy and stable. As of 2024Q1, the company's inventory turnover decreased by 40 days to 200 days year-on-year, and inventory turnover accelerated. The turnaround days for accounts receivable/payable remained stable from +2/-1 days to 26/71 days compared to the same period. By the end of the period, the company had monetary capital of 3.23 billion yuan and abundant cash flow.
Investment advice: Compared with the strong performance of Yinleven terminals, the post-pandemic recovery is leading the industry, and profitability is rising steadily. Mergers and acquisitions of luxury brands to create an international multi-brand high-end fashion group, and we are optimistic about its rapid growth. The company is expected to achieve net profit of 11.2/13.3/1.53 billion yuan in 2024-2026, an increase of 22.7%/19.1%/15.1% year-on-year. The current stock price is 29.7 yuan, which corresponds to a valuation of 15/13/11 times, maintaining its “buy” rating.
Risk warning: Consumption recovery falls short of expectations, market competition intensifies, new product development and sales fall short of expectations, store expansion falls short of expectations, profit forecasts and valuations fall short of expectations, etc.