Core views:
The company's 2023 performance was steady and the dividend ratio was high. In 2023, the company's revenue was 3,030 billion yuan, down 1.62% year on year, and net profit to mother was 572 million yuan, up 7.02% year on year. The company plans to pay a cash dividend of 6.5 yuan for every 10 shares, with a dividend ratio of 5.93%.
In 2023, the company's group purchase revenue increased, and online, direct management, and franchise revenue declined slightly. By channel, in 2023, the company's online revenue was 1,210 million yuan, down 5.49% year on year, direct revenue was 723 million yuan, down 1.14% year on year, franchise revenue was 824 million yuan, down 0.43% year on year, and group purchase revenue was 164 million yuan, up 19.48% year on year. The company has 484 directly managed stores and 1,010 franchise stores, a net increase of 13 and 11, respectively, compared with the beginning of the year.
The company's gross margin and period expense ratio increased in 2023. The company's gross profit margin in 2023 was 55.63%, an increase of 2.53 percentage points over the previous year. The increase in gross margin was mainly due to the continuous improvement of the company's brand power. The cost rate for the period was 33.11%, an increase of 0.16 percentage points over the previous year. The main reason was the increase in sales expenses. The increase in advertising expenses, container display and decoration costs was significant year-on-year. In 2023, the company's inventory turnover days and accounts receivable turnover days were 196 days and 38 days respectively, an increase of 0 days and 12 days over the same period last year. The company's net operating cash flow was 766 million yuan, an increase of 7.89% over the previous year.
The company's 2024Q1 performance is resilient. 2024Q1, the company's revenue was 652 million yuan, up 5.20% year on year, and net profit to mother was 122 million yuan, up 10.24% year on year. Among them, direct management, franchise, online, and group purchase revenue was 149 million yuan, 134 million yuan, 278 million yuan, and 39 million yuan, up 4.15%, 7.50%, 1.34%, 10.51% year on year, gross profit margin of 54.21%, a year-on-year decrease of 0.13 percentage points. The cost rate for the period was 33.28%, an increase of 0.76 percentage points over the previous year.
Profit forecasting and investment advice. EPS for 2024-2026 is expected to be 0.76 yuan/share, 0.82 yuan/share, and 0.89 yuan/share, respectively. Referring to the historical average and considering the company's high dividend rate, the company was given 15 times PE in 2024, with a reasonable value of 11.35 yuan/share to maintain a “buy” rating.
Risk warning. The risk of increased market competition; the risk of a slowdown in real estate sales growth; the risk of rising labor costs and fluctuations in raw material prices.