In 2023, the company achieved operating income of 5.09 billion/+33.56%, net profit attributable to mother of 333 million/ +67.41%, and net profit of 306 million/ +71.93% after deducting non-return net profit. In the 24Q1 quarter, the company achieved revenue of 1,796 million/ +17.87%; net profit attributable to mother of 131 million/ +5.47%; net profit after deducting non-return to mother of 129 million/ +5.37%. The company is positioned as Oriental fashion, and its differentiated brand and product positioning are in line with the consumer trend of young people; at the same time, there is plenty of room to expand, and expansion is expected to accelerate after joining; the company can be expected to grow under the dual drive of channel+product and the continuation of the high gold boom. Maintain a “Highly Recommended” rating.
Revenue continued to grow at a high rate, and net profit grew steadily in 24Q1. In 2023, the company achieved operating income of 5.09 billion/+33.56%, net profit attributable to mother of 333 million/ +67.41%, and net profit of 306 million/ +71.93% after deducting non-return net profit.
Looking at a single quarter, the 23Q4 company achieved revenue of 1,401 billion/ +35.14%, and net profit of 20.41 million yuan to mother.
In a single quarter of 24Q1, the company achieved revenue of 1,796 million/ +17.87%, net profit attributable to mother of 131 million/ +5.47%, after deducting net profit of 129 million/ +5.37%. The company achieved high revenue growth in 2023, and its annual performance was hampered by the women's bag business estimated goodwill impairment preparations of about $40 million. The company will now pay 2.5 yuan for every 10 shares in 2023, totaling about 222 million, with a dividend rate of about 67%, and a dividend rate of about 4% based on the closing price on April 30.
The franchise model accelerates the layout, and it is expected that stores will continue to be opened at a high speed in 2024. By category, in 2023, the company's fashion jewelry achieved revenue of 2,989 million/ +20.43%, traditional gold achieved revenue of 2,265 million/ +56.75%, leather goods achieved revenue of 371 million/ +14.41%, and agency brand licensing and franchise service revenue of 214 million/ +68.19%. By channel, the company's own revenue in 2023 was 3.258 billion/ +14.53%, franchise agent revenue was 2,481 million/ +67.55%, and wholesale revenue was 135 million/ +57.63%. In 2023, the company's jewelry business increased net by 241 stores, including 382 new stores, 141 stores closed, and the total number of jewelry stores reached 1,399 at the end of '23. It is expected that more than 300 net stores will be opened in 2024, and channel expansion will continue.
Gross margin declined due to product restructuring, and cost ratios continued to be optimized as scale increased. The company's gross margin in 2023 is 26.07% /-4.11pct, which is expected mainly due to product restructuring; the annual net margin is 5.59% /+0.95pct. In 2023, the company's financial expense ratio was 0.53% /-0.14pct, the management expense ratio was 2.13% /-+0.07pct, and the sales expense ratio was 14.03% /-3.49pct.
Investment advice. The company is positioned as Oriental fashion, and its differentiated brand and product positioning are in line with the consumer trend of young people; at the same time, there is plenty of room to expand, and expansion is expected to accelerate after joining; the company can be expected to grow under the dual drive of channel+product and the continuation of the high gold boom. The company's net profit for 2024-2026 is estimated to be 4.1/4.7/540 million, respectively, maintaining the “Highly Recommended” rating.
Risk warning: Competition in the industry intensifies, store expansion falls short of expectations, and the risk of gold price fluctuations.