Introduction to this report:
The company maintained growth in 2024Q1 under a high base for the same period in 2023, and net profit continued to improve. The company is deeply involved in the stable basic market of Greater Chengdu. After investing in the main, the company can effectively empower and bring about collaborative development and achieve long-term development.
Key points of investment:
Maintain an increase in holdings. Considering that 2024Q1 continued to grow under a high base in the same period in 2023, maintain the company's 2024/25/26 EPS at 0.43/0.46/0.50 yuan, respectively, give a 2024 17xPE valuation, maintain a target price of 7.24 yuan, and maintain an “incremental” rating.
Performance summary: 24Q1 achieved revenue of 2,671 million/ +4.55%, realized net profit of 163 million/ +15.95%, and realized non-net profit deducted from mother of 151 million/ +9.86%, of which investment income reached 38 million/+ 51.09%. After deducting this portion of investment income, the company's main business profit increased 8.26% year on year.
Net interest rates are improving, and investment returns contribute to performance growth. The 24Q1 gross margin of the company was 29.8% /-0.23pct. The net margin was 6.1% /+0.60pct. The cost rate for the period was 24.4% /pct, with sales/management/finance expense ratios of 22.2%/1.2%/1.0%, respectively, -0.27pct/-0.03pct/+0.30pct year-on-year, respectively. 24Q1 investment income totaled RMB 38 million, an increase of 51.09% over the previous year, effectively contributing to the increase in performance.
Sichuan Commercial Investment is expected to effectively empower development, and the strategic layout of stores will continue to be strengthened in 2024. The commercial investment group settled into the company and became the actual controller, which can bring strong strategic support to the company. Furthermore, commercial investment has a layout in sectors such as food, grain and oil, warehousing and logistics, and agricultural product trading, which can effectively empower the company and bring about collaborative development. In 2023, the company opened 144 new stores and renovated 279 old stores. It is expected that in 2024, the company will further strengthen its store layout, continue to promote the transformation of old stores to maintain the continuous growth of the same store, and accelerate the pace of store expansion.
Risk warning: Competition intensifies, store expansion falls short of expectations; uncertainty about return on investment.