Introduction to this report:
In 2023, 2024Q1 revenue and profit were in line with expectations, and the 2024 results are expected to continue to grow steadily.
Key points of investment:
The investment proposal takes into account the weak recovery in domestic terminal retail, and we lowered the company's EPS forecasts for 2024-25 and 2026 to 0.76/0.84/0.90 yuan, respectively (0.80/0.89 yuan before the adjustment for 2024-25, respectively). Considering that the company is a leader in high-end home textiles, demand resilience and performance growth resilience are relatively strong. The company was given 17 times higher PE than the industry average in 2024, raised the target price to 12.91 yuan, and maintained a “gain” rating.
In 2023, 2024Q1 revenue and profit were in line with expectations. The company's operating revenue/net profit to mothers/net profit after deduction of non-net profit in 2023 was 30.30/5.72/522 million yuan respectively, down 1.62%/up 7.02%/8.35% year-on-year respectively. 2024Q1's operating revenue/net profit attributable to mothers/net profit after deduction of non-net profit were RMB652 /122/105 million, respectively, up 5.20%/10.24%/2.40% year-on-year, respectively.
Direct management and franchise channels are resilient, e-commerce channels are under pressure, and group buying channels are developing rapidly.
1) Direct operation/franchise/e-commerce and group purchase revenue in 2023 was 723/8.24/12.10/164 million yuan respectively, down 1.14%/down 0.43%/down 5.49%/up 19.48% year-on-year. 2) 2024Q1 direct operation/franchise/e-commerce and group purchase revenue was 1.56/1.44/2.81/0.43 billion yuan respectively, up 4.12% /7.50% /1.34% /10.51% year-on-year.
With the steady development of various channels and the continuous promotion of refined management, the 2024 performance is expected to accelerate growth. The revenue growth trend of 2024Q1 channels is good. The company uses a flat structure for dealers, assesses e-commerce with net profit, and continuously improves product structure and operational efficiency. We expect the number of company stores to expand steadily throughout 2024, driving continued steady growth on the revenue side.
Risk warning: Terminal consumer demand recovery falls short of expectations, offline store expansion falls short of expectations, etc.