Key points of investment:
Investment proposal: Considering the short-term increase in Oriental Selection's remuneration, increased investment in cultural tourism business, and the acceleration of new store openings, the company's net profit for FY2025-2026 and the additional 2027 non-GAAP net profit was reduced to 5.37 (-9%) /7.41 (-5%) /1.007 billion US dollars, respectively, and EPS was 0.27/0.39/0.54 US dollars, increasing its holdings.
Performance summary: FY24 achieved revenue of 4.314 billions/ +44%, gross profit of 2.263 billions/ +42%, gross profit margin of 52.45% /-1pct, operating profit 0.35 billion/ +84%, margin of 8% /+2pct, non-GAAP profit of 0.381 billion dollars/ +47%, margin 8.84%, consistent expectations of 0.42 billion US dollars; FY24Q4 revenue 1.137 billion USD/ +32%, in line with BBG's agreed expectations, gross profit of 0.594 billion USD/ +27%, gross profit margin 52.28% /-2pct, sales expenses 0.208 billion/ +41%, expense ratio 18% /+1pct, management expenses 0.376 billion USD/ +37%, expense ratio 33% /+1pct, operating profit 0.011 billions/ -78%, margin 1% /-5pct, return to mother Profit 0.027 billion USD/ -7%, margin 3% /+0pct, non-GAAP net profit 0.037 billion USD/ -41%, BBG agreed to expect 0.072 billion US dollars, margin 3.25% /-4pct.
The decline in profit margins in the main business is mainly due to accelerated store opening, increased investment in cultural tourism, and increased employee remuneration. Excluding selection profits, the main business profit margin was 3% /-5 pct, and the quarterly adjustment turned into a profit. The decline in the main business profit margin was due to accelerated store opening (24Q4 +37% compared to the same period in 23Q4, opening 114 new businesses in a single quarter vs. 36 new businesses in 23Q4) + cultural tourism business losses+employee compensation increase (total sales and management expenses ratio is consistent. The total sales and management cost ratio is still 4.5 pct higher than expected. 50 million US dollars, and the quarterly adjusted parent exceeded expectations of 35 million US dollars). Compared with the previous two factors, Staff selection The impact of salary settlement slightly exceeding expectations on overall operating profit is even more critical. If effects such as one-time bonuses and selection are removed, the profit margin of the main business is expected to remain flat compared to the same period last year.
The FY25Q1 guidelines slightly exceeded expectations and focused on the profit margins of the main business after absorbing the impact. In the announcement, the company indicated that the FY25Q1 revenue side (excluding selection) was +31 to 34% year-on-year, corresponding to 1.2547-1.2835 billion US dollars in revenue, in line with previous expectations. Combined with Huihui's influence on the FY24Q4 and FY25Q1 cost side, the profit margin is still expected to exceed market expectations by +2pct; the budget for new outlets is expected to be +20 to 25% year-on-year in FY25, and maintain a high trend in the medium to long term.
Risk warning: policy risk, accelerated supply recovery, anchor regulation risk.