24Q1 revenue of 650 million yuan increased 5%, net profit to mother increased by 10%. The company released financial reports. 24Q1 revenue of 650 million yuan, up 5.2% year on year, net profit to mother of 120 million, up 10.2% year on year; 23 year revenue was 3.03 billion, down 1.6% year on year, and net profit to mother was 570 million, up 7.0% year on year. Of these, 23Q4 revenue of 1.1 billion yuan increased 0.7% year on year, and net profit to mother increased by 9%.

The company's cash dividend amount in '23 was 540 million, accounting for 95% of net profit attributable to mother, maintaining a high dividend ratio.

Looking at revenue by category, the company's kit revenue in '23 was 1.2 billion (39% of total revenue), down 0.8%; quilt revenue was 1.2 billion yuan (40% of total revenue), up 1.4%; pillow revenue was 200 million (7% of total), down 4%; and revenue from other categories was 390 million, down 11%.

By sales model, offline direct revenue in '23 was 700 million (24% of the total), a decrease of 1%; offline franchise revenue of 800 million (27% of the total), a decrease of 0.4%; e-commerce revenue of 1.2 billion (40% of the total), a decrease of 5%; and group purchase revenue of 160 million yuan (accounting for 5% of the total), an increase of 19%.

24Q1 gross profit margin of 54.2% decreased by 0.1 pct, net profit margin 18.8% increased by 0.9 pct, company 24q1 gross profit margin 54.2% decreased by 0.1 pct; 23 gross profit margin of 55.6% increased by 2.5 pct, of which 70.1% of direct sales channel gross margin increased 3.6 pcts, franchise gross profit margin 56.2% increased 3.6 pcts, and e-commerce gross profit margin 48% increased 1.7 pct.

The 24Q1 company's rate increased by 0.8 pct, mainly due to the same increase in the sales rate by 1.2 pct; the rate for the 23-year period increased by 0.2 pct. Among them, the sales rate increased by 0.5 pct and the management rate decreased by 0.3 pct. The main reason was the reduction in amortization fees and equity incentive expenses, and the financial rate decreased by 0.1 pct, mainly due to the increase in interest income from large deposit books.

The company's 24Q1 net profit margin of 18.8% increased by 0.9 pct; net profit margin of 18.9% increased by 1.6 pcts in '23.

Continue to strengthen store operation and management to highlight the characteristics of artists' spinning

By the end of '23, the company had a total of 1,494 offline stores (net increase of 24 over year), including 484 direct-run stores (net increase of 13 over year). The average annual revenue of direct-run single stores was 1.49 million, a decrease of 3.8%; there were 1,010 franchisee stores (net increase of 11 over year). The company continues to improve store operation and management capabilities, invest in information-based management systems, build an integrated enterprise management application platform, extend management reach to the front end of the business, and use big data, artificial intelligence, etc. to improve overall process collaboration capabilities and operational efficiency.

At the same time, in '23, the company carried out unified planning in terms of store design and display, product innovation, and multi-series fashion product development, etc., and gradually laid out super image stores in key cities across the country to strengthen consumers' brand awareness with offline physical beauty spaces.

E-commerce adheres to refined operation and uses profit as a team assessment

In '23, the company's e-commerce sales revenue was 1.2 billion, accounting for about 40% of total revenue. Among platforms, Tmall sales accounted for 25%, JD accounted for 39%, Vipshop accounted for 14%, and the return rate for major sales brands was about 11.9%.

By the end of '23, the company's e-commerce team had a total of about 231 people. Using profit as an assessment, the team continued to improve basic operating capabilities and supply chain response speed, and optimize the product structure. Categories such as duvets and silk quilts continued to grow; expand live streaming channels and lay out short videos to get more traffic; strengthen member operations and build an in-depth private membership system.

Company Report | Annual Report Review Report

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Update profit forecasts and maintain “buy” ratings

The company's artist textile products have differentiated competitive advantages and continuously optimize store operations. E-commerce focuses on profit and maintains a steady growth pace and a high level of dividends; considering weak terminal consumption performance, we adjusted the company's revenue expectations. The company's revenue for 24-26 years is 32.4, 35.2, and 3.75 billion, respectively (the previous 24-25 values were 34.6 billion and 3.77 billion, respectively), and net profit to mother was 6.3, 7.0 million, and 750 million (maintaining 24-25 year forecasts), and EPS was 0.76, 0.84, and 0.84, respectively. 0.90 yuan/share, corresponding PE is 15, 13, and 12x, respectively.

Risk warning: risk of fluctuations in raw materials and labor costs; risk of market competition; risk of impact caused by brand piracy, etc.