Incident: The company disclosed its annual report for '22 and its quarterly report for '23. In 2022, the company achieved operating income of 3,901 billion yuan, an increase of 38.75% over the previous year; net profit of -265 million yuan, slightly lower than the lower limit of the previous performance forecast; net profit after deducting non-return to the mother was -319 million yuan, lower than the lower limit of the performance forecast range; the company achieved operating income of 1,102 billion yuan in 23Q1, an increase of 37.22% over the previous year, net profit of -38 million yuan, a year-on-year decrease of 143.88% after deducting net profit of -45 million yuan, a year-on-year decrease of 154.65%.
Footwear business inventory is gradually being cleared, and the leading position in live e-commerce highlights that under the influence of the epidemic, the offline channels of the company's footwear business have been greatly affected, and the footwear business is in a state of loss. Considering that the company quickly digests inventory through clean-up promotions, etc., the company accrued bad debts and prepared for inventory price reductions of about 291 million yuan throughout the year, which dragged down the company's overall profit side. We believe that the current sharp decline in the company's footwear business inventory may have a relatively limited impact on 2023 performance. In 2022, the company's core growth business, the live e-commerce business, reached GMV15 billion, an increase of about 50% over the previous year. We think Q1 is the low season for e-commerce. Looking ahead to Q2, the company is expected to adjust the pace of broadcasting, anchor schedules are expected to increase, and GMV growth is expected to increase month-on-month.
The company issued an equity incentive plan, which binds the company's core management talents. On April 27, the company released the 2023 stock option incentive plan. It plans to grant 40 million stock options to 269 incentive targets, including directors, middle and senior management, etc., accounting for about 4.39% of the total share capital. The exercise price is 14.33 yuan/share; we believe that confirmation of the equity incentive plan is conducive to stimulating the company's organizational vitality and deeply binding outstanding management talents.
Non-standard business progressed steadily, building a second growth curve
For the apparel non-standard sector, the company completed the apparel supply chain infrastructure based on the “Seek the Cloud” system, prepared a “Fushake” project using an area of 150,000 square meters, carried out a preliminary experiment in clothing distribution business, and further integrated the clothing supply chain. We are optimistic about the growth potential of non-standard businesses. With a multi-level anchor matrix, the company is expected to achieve efficient circulation in the clothing supply chain and contribute considerable GMV growth.
Investment advice: The company's revenue for 2023/2024/2025 is expected to be 57/78/10 billion yuan respectively, up 45%/37%/29%, respectively, and the net profit of the mother is 4.5/71/98 billion yuan respectively. Of these, 24/25 increased 57%/38% year-on-year respectively, and the corresponding PE was 43X/28X/20X respectively, maintaining the “buy” rating.
Risk warning: Regulatory policy risks, non-standard business growth falls short of expectations, increased competition in the live e-commerce industry, risk of impairment of goodwill