Core views
In 2023, the company's revenue was 3,536 million yuan/ +22.6%; net profit to mother was 911 million yuan/ +25.2%. 24Q1: The company's revenue was 1,268 million yuan/ +17.6%; net profit to mother was 362 million yuan/ +20.4%. By channel, the company's direct revenue in '23 was 2,395 million yuan/ +34.6%, gross profit margin 83.1% /+1.0pct; franchise revenue was 918 million yuan/ -2.1%, gross profit margin 70.3% /-0.7pct; online revenue was 195 million yuan/ +16.1%, gross profit margin of 70.6% /+7.2pct. Direct store efficiency recovered rapidly, and with discount rates improved, direct and online gross margins increased. In '23, the company completed the acquisition of two internationally renowned high-end menswear brands. Among them, new products from the KENT & CURWEN brand are expected to take the lead in the fall and winter of 2024, opening a new chapter of internationalization.
occurrences
The company released its 2024 quarterly report. In the first quarter of 2024, the company's revenue was 1,268 million yuan/ +17.6%; net profit attributable to mother was 362 million yuan/ +20.4%; net profit after deducting non-return to mother was 351 million yuan/ +21.9%; net operating cash flow was 544 million yuan/ +7.3%. The basic EPS was 0.63 yuan/share, +18.9% YoY; the weighted average ROE was 7.13% /+0.11pct.
The company released its 2023 annual report. In 2023, the company's revenue was 3,536 million yuan/ +22.6%; net profit attributable to mother was 911 million yuan/ +25.2%; net profit after deducting non-return to mother was 867 million yuan/ +29.4%; net operating cash flow was 1,296 million yuan/ +37.5%. The basic EPS was 1.60 yuan/share, +25.0% year over year; the weighted average ROE was 20.31% /+0.96pct. The company plans to distribute a cash dividend of RMB 10 (tax included) to all shareholders for every 10 shares, with a cash dividend ratio of 62.7%.
Looking at a single quarter, 23Q4's revenue was 740 million yuan/ +12.1%; net profit attributable to mother was 153 million yuan/ -1.0%; net profit after deducting non-return to mother was 142 million yuan/ +3.9%.
Brief review
Direct store efficiency recovered rapidly in '23, and with improved discount rates, direct and online gross margins increased. Looking at volume and price splitting, the company's apparel revenue in '23 was 3,508 million yuan/ +21.6%, sales volume was 4.39 million pieces/ +1.3%, and the average price of each item was 800 yuan/ +20.0%. Improved discount rates and increased direct sales ratio boosted the average price of items. By channel: 1) Direct channel revenue for 23 years was 2,395 billion yuan/ +34.6%, gross profit margin 83.1% /+1.0pct. At the end of '23, the number of direct-run stores was 607, up 4.8% year-on-year, with an average monthly revenue contribution of 337,000 yuan/ +26.0%.
2) The revenue of the franchise channel in '23 was 918 million yuan/ -2.1%, the gross profit margin was 70.3% /-0.7pct, and the number of franchised stores at the end of '23 was 648, +36, an increase of 5.9%. The average monthly revenue contributed by a single store was 121,000 yuan/ -8.3%, mainly due to the high base of the franchise channel in '22 and the reduction in deliveries handled by franchisees. 3) Online channels had 23 years' revenue of 195 million yuan/ +16.1%, gross profit margin of 70.6% /+7.2pct.
Inventory turnover is accelerated, operating efficiency is optimized, and profitability is steadily improving. The company's inventory at the end of 23 years was 708 million yuan/ -5.09%, of which inventory within 2 years accounted for 87.1% /+8pct, and the number of inventory turnover days was 346 days/a year-on-year decrease of 42 days. The company continued to strengthen inventory control, improve inventory digestibility, and improve operating efficiency. In 2023, the company's gross margin was 78.61% /+1.21pct, and the net margin was 25.76% /+0.53pct; 24Q1 company's gross profit margin was 76.03% /+0.32pct, and the net margin was 28.55% /+0.68pct. On the expense side, the company's sales, management, R&D, and finance cost rates for 23 years were 37.09% /+1.17pct (increase in employee remuneration, store operating expenses, e-commerce service fees), 7.85% /+1.06pct (increase in employee remuneration, intermediary service fees and office travel expenses), 3.51% /+0.04pct, -0.78% /-0.51 pct (increase in interest income on large time deposits); 24Q1 sales, management, R&D, and finance expenses were 33.0/-0.22pct, respectively 6.10% /+1.22pct (increase in salary and rental expenses), 3.18% /+0.13pct, -0.98%/-0.22pct (increase in interest income on large time deposits).
Acquire two internationally renowned high-end menswear brands, enrich the high-end brand matrix, and open a new chapter of internationalization. The company completed the acquisition of global trademark ownership rights for overseas luxury brands CERRUTI 1881 and KENT & CURWEN brands in April '23. Among them, CERRUTI 1811 specializes in men's business attire, and K&C specializes in high-end sports and fashion menswear. The company established an R&D center in Paris in France, built an international team for product design, development and brand operation, and hired Daniel Kearns, the chief creative officer. It is expected that new products from the K&C brand will be the first to be unveiled in the fall and winter of 2024. With Biyin's successful experience and resources in operating high-end menswear in China, it is expected that the historical and tonal advantages of the two major brands will gradually expand and open up room for the company's long-term growth.
Profit forecast: We expect the company's revenue for 2024-2026 to be 41.6, 4.86 billion yuan, 5.66 billion yuan, up 17.6%, 17.0%, and 16.3% year on year; net profit to mother will be 11.3 billion yuan, 13.7 billion yuan, 1.63 billion yuan, up 24.1%, 19.4% year on year; corresponding P/E will be 14.9, 12.3x, and 10.3x, maintaining a “buy” rating.
Risk warning: 1) The progress and magnitude of the revenue recovery falls short of expectations: It is expected that with the gradual recovery of consumption, the company's turnover performance will also directly benefit. If the progress or magnitude of the flow recovery of the company's brands falls short of expectations, it will affect the company's operating performance. 2) Store opening progress falls short of expectations: The development of the number of direct sales and franchise channel stores of the Bienleven brand is one of the main driving factors for the company's offline channel revenue growth. If the number of new stores added to the Bienleven brand falls short of expectations, it will affect the company's performance. 3) Deepening retail discount rates affect brand profit margins: Some brands in the apparel industry brand inventory is still high. If some brands remove inventory by deepening discount rates, it will intensify price competition in the industry, which in turn affects the level of brand discount rates. Deepening discount rates will have an impact on brand profit margins.