Incident: The company released its 2023 annual report. In 2023, it achieved operating income of 10.12 billion yuan, a year-on-year increase of 16.2%; realized net profit of 240 million yuan, a year-on-year decrease of 35.8%; and realized net profit without deduction of 180 million yuan, a year-on-year decrease of 46.9%. The company released its 2024 quarterly report. In 24Q1, it achieved operating income of 4.13 billion yuan, an increase of 10.4% over the previous year; realized net profit of 130 million yuan, an increase of 28.2% over the previous year; and realized net profit without return to mother of 130 million yuan, an increase of 28.3% over the previous year.
23 years have come to a successful conclusion, and the 10 billion revenue milestone has been reached. The company's overall revenue in '23 exceeded 10 billion dollars. Liquor/wine revenue changed +20.0%/-19.9% year on year, liquor business tonnage price/ sales increased 11.7%/7.5% year on year, respectively, and gross margin fell 3.7 pct to 9.2% year on year. It is expected mainly due to an increase in the share of famous wine products. E-commerce revenue increased by 4.2%/2.9%/1.3%/21.9%/9.1%/9.6%/13.9%/182.8%, respectively, in East China/Central China/Southwest/ Northeast China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/North China/respectively.
In 23 years, the company has developed 201 Huazhi 3.0 stores, and the image and quality of the stores have improved markedly. In terms of cost ratios, the company's sales expense ratio/management expense ratio changed by -0.50/+0.01pct year on year respectively in '23, and the number of sales staff decreased by 30% year on year. It is expected that personnel expenses will still decrease in sales expenses in '24. The net profit margin for the whole year decreased by 1.88pct to 2.32% year over year.
Revenue continued to grow in the first quarter, and profitability rebounded. The 24Q1 company's revenue increased 10.4% year on year, 24Q1+23Q4 revenue increased 20.7% year on year, contract debt increased by 38 million yuan year on year in the first quarter, and revenue continued to grow. 24Q1 gross margin increased 0.21pct to 10.48% year on year, sales expense ratio/management expense ratio decreased by 0.70/0.21pct year on year, overall net interest rate increased 0.44pct to 3.14% year on year, and profitability rebounded.
Investment advice: The company's revenue for 24-26 is expected to be 113.3/129.0/14.26 billion yuan, with a year-on-year growth rate of 11.9%/13.9%/10.5%, net profit to mother of 3.0/3.4/450 million yuan, and a year-on-year growth rate of 27.2%/13.8%/34.6%, maintaining a “buy” rating.
Risk warning: Fine wine promotion falls short of expected risk, store expansion falls short of expected risk, risk of insufficient supply of famous wine