Offline stores continue to be optimized, and profitability is steadily improving. Baby-friendly rooms achieved revenue of 806 million yuan, yoy +6.42%; net profit to mother was 6.3069 million yuan, yoy+135.29. Mainly due to continuous optimization of channel operation efficiency, improvements in store manpower and floor efficiency to achieve increased profitability, and 24Q1 store sales gross margin increased 0.03 pct year-on-year. The company opened 4 new stores in 24Q1. At the same time, 15 stores have been signed to open, all of which are scheduled to open in the second quarter.
The “channel+brand” dual-line integration strategy enhances brand value and business quality. In 2023, the company improved the operating efficiency of its brand “BebeiBear”, closed inefficient stores, opened more shopping malls with development prospects and introduced competitive brands, thereby increasing the overall gross margin of Beibeixiong by 4-5 pcts compared to before the acquisition, turning losses into profits. In addition, the company made full use of platform resources to continue to strengthen sales and promotion on public platforms such as Tmall, JD, Pinduoduo, Koala, and Vipshop. The company's own third-party platform business increased 77% year over year in 2023. Among them, the Douyin platform grew rapidly, increasing 290% year on year, reaching more public domain traffic; while O2O's instant retail business relies on the scale advantage of nearly 500 offline stores and has covered 38 cities across the country. At the level of brand cooperation, the company cooperates directly with a large number of enterprises to ensure product quality traceability, and the joint operation of sales customers allows resources to be further integrated, thus achieving 1+1>2 revenue results. The company's R&D team will target and select products according to changes in market consumption trends and customer habits. Combined with the company's omni-channel marketing and efficient and intelligent warehousing and logistics network, it will accurately locate new customers while increasing the stickiness and repurchase rate of old customers.
Investment advice: Brands such as Baby Friendly Room and its Baby Bear are deeply cultivated in East China and central China, and have high brand awareness and channel influence. The company enhances its brand awareness from multiple dimensions and channels, and continuously improves its comprehensive maternal and child service capabilities. It is estimated that in 24/25/26, the company's revenue will reach 3.48/36.82/38.55 billion yuan, yoy +4.4%/4.7%; net profit to mother will reach 1.15/1.27/ 139 million yuan, yoy +10.2%/10.4%/8.9%, respectively. I am optimistic that the company will expand the market by improving product competitiveness and strengthening brand building, and maintain the “gain” rating.
Risk warning: Competition in the industry intensifies; store expansion falls short of expectations; fertility rates continue to decline.