Matters:
According to the announcement, FY2024 achieved revenue of 28.93 billion yuan, an increase of 6.9% over the previous year, and realized net profit of 2.21 billion yuan, an increase of 20.5% over the previous year. The company declared a final dividend of RMB 0.05 per share and a special dividend of RMB 0.15 per share.
Commentary:
Return to a high-quality growth trajectory and expand the brand matrix. FY2024's revenue increased 6.9% to 28.93 billion yuan, with major brands growing 6.5% to 24.83 billion yuan and non-major brands growing 10.5% to 3.89 billion yuan. During the fiscal year, the company continued to enrich its brand matrix, strengthen product construction in comprehensive sports, professional sports, leisure sports, etc., and establish retail operation cooperation with HOKA and Kaileshi. On May 22, the company established a strategic partnership with the Canadian high-end trail running brand Norda. As its exclusive partner in China, Taobo is independently responsible for brand promotion, marketing, and global operations. At the same time, the company is also cooperating with Fanatics, the world's leading digital platform for authorized sporting goods, to jointly expand the commercial operation of its licensed sports IP in Greater China.
The layout is global retail, and the store's store efficiency and floor efficiency have all been repaired. During the reporting period, the company opened 526 new stores and closed 947 stores; by the end of the fiscal year, it had a total of 6,144 stores. The total number of stores decreased by 6.4% year on year, and the gross sales area decreased by 0.8% year on year. Based on the differentiated characteristics of partner brands, consumer profiles, product attributes, etc., the company targeted store types and promoted upgrading. The sales area of a single store increased by 6%. Among them, the single store area of major and non-main brands all increased, and store efficiency and floor efficiency recovered. With online channels, the company formed a combination of platform e-commerce, content e-commerce, and private domain operation. As of the end of the fiscal year, the company's cumulative number of member users was 76.3 million. Members contributed 93.4% of total in-store retail sales, and repeat members contributed about 70% of total member spending.
Improved profitability and continued shareholder returns. FY2024 achieved a gross profit margin of 41.8%, +0.1 pct year over year, which was a year-on-year improvement in retail and wholesale channel discount rates and an increase in the share of retail business, which had a positive effect; it achieved net profit of 2.21 billion yuan and a net profit margin of 7.6% to mother, +0.8 pct year on year. Since its listing, the company has attached importance to shareholder returns. FY2024 has paid a total dividend of 0.36 yuan/share, with a dividend payout ratio of 100.9%.
Investment advice: We are optimistic about Taobo's cooperative expansion on new tracks and new brands, as well as optimization and upgrading on the retail channel side. Taking into account the weak trend of consumer recovery, we lowered its revenue forecast for FY2025-FY2026 to 305/32.5 billion yuan (previous value: 333/36.9 billion yuan), added a FY2027 forecast of 34.9 billion yuan; lowered its net profit forecast for FY2025-FY2026 to 25.0/2.86 billion yuan (previous value of 2.6/3.14 billion yuan), and added a forecast value of 3.36 billion yuan for FY2027. Referring to the valuation of comparable companies in the industry, the FY2025 13xPE valuation is given, corresponding to a market value of HK$35.7 billion and a target price of HK$5.8 billion, maintaining the “Recommended” rating.
Risk warning: Residents' willingness to spend has declined, the pace of brand removal falls short of expectations, new brand expansion is slow, brand public opinion events