Incidents:
Heilan Home announced the 2023 and 2024Q1 results announcements on April 29, 2024:
2023/2024Q1 revenue was 215.3/6.18 billion yuan, +16.0%/+8.7%, net profit to mother was 29.5/890 million yuan, +37.0%/+10.4% YoY, and net interest rate to mother was 13.7%/14.4%, compared with +2.1pct/+0.2pct, EPS 0.68/0.20 yuan, +36.0%/+5.3% YoY. In 2023, the company plans to pay a dividend of 0.56 yuan/share (tax included). The total estimated cash payment amount is 2.69 billion yuan, and the dividend payment rate is 91.1%.
Investment highlights:
The main brands grew steadily throughout 2023, and the gross margin of online sales improved markedly. In 2023, the company's revenue was 21.53 billion yuan, +16.0% year over year, of which main brand revenue was 16.46 billion yuan, +19.7% year over year, main brand gross margin was 45.2%, +2.96pct compared to 2022; overall direct-operated/franchise store revenue was 4.53 billion yuan/13.94 billion yuan, +49.3%/+10.5% year over year; by channel, online sales were 3.26 billion yuan, +14.1% year on year, accounting for 15.7%, compared to 2022 -0.25pct, offline sales was 175.0 100 million yuan, +16.3% YoY, accounting for 84.3%. Compared with +0.25pct in 2022, the overall channel gross margin was 45.9%, compared with +1.8pct in 2022, mainly due to a significant increase in online sales gross margin, +8.3 pct compared to 2022. The company's net profit for the year was 2.95 billion yuan, +37.0% year-on-year, and the net interest rate to mother was 13.7%. Compared with +2.1pct in 2022, the company plans to pay a dividend of 0.56 yuan/share (tax included) in 2023. The total estimated cash payment amount is 2.69 billion yuan, with a dividend ratio of 91.1%. By the end of 2023, the total number of the company's main brand stores was 5,976, with a net opening of 34, of which 1,252 were directly managed by the main brand, a net increase of 198, 4,724 franchised stores, and 164 net sales.
The growth rate of 2024Q1 group buying and online revenue is impressive, and direct-managed stores continue to expand. 2024Q1's revenue was 6.18 billion yuan, +8.7% year over year, of which main brand revenue was 5.13 billion yuan, +6.5% year on year, group purchase series revenue was 550 million yuan, +54.2% year on year; direct/franchise revenue was 1.41 billion yuan/4.09 billion yuan, +13.9%/+0.4% year over year; by channel, online sales were 850 million yuan, +34.0% year on year, and offline sales were 5.20 billion yuan, +3.3% year on year. The overall channel gross margin was 47.3%, +0.48pct compared to the same period last year. The net interest rate due to 2024Q1 was 890 million yuan, +10.4% year over year, and the net interest rate to mother was 14.4%, +0.2pct compared to the same period last year.
As of the end of 2024Q1, the total number of the company's main brand stores was 5954, compared with 22 in early 2024, of which the number of directly-managed stores was 1,267, +15 compared to the beginning of the year. The number of franchised stores was 4,687, compared to 37 at the beginning of the year.
Profit forecast and investment rating: The company is expected to achieve long-term stable growth as a high-quality leading brand that meets public demand. Considering the uncertainty of the current consumer environment, we adjusted the profit forecast. The company expects to achieve revenue of 233.9/252.6/27.24 billion yuan in 2024-2026, +8.6%/8.0%/7.8% YoY; net profit to mother 32.4/35.3/3.83 billion yuan, +9.9%/8.4%; corresponding to the closing price on April 30, 2024. 2024/2025/2026 PE was 12/11/10x, respectively, maintaining a “buy” rating.
Risk warning: 1) Macroenvironmental risk: public health emergency, risk of offline sales being affected; 2) industry competition risk: risk of increased industry competition and deterioration of the pattern; 3) risk of consumer preferences: risk of changing consumer preferences and falling short of expected product sales.