Event Overview: In 2023, the company achieved revenue of 16.552 billion yuan, +50.61% year-on-year, achieved net profit of 707 million yuan, +53.61% year-on-year, and achieved net profit of 658 million yuan without return to mother, +62.18% year-on-year. In 24Q1, revenue of 6.316 billion yuan was achieved, +25.01% year over year, net profit to mother was 272 million yuan, +16.15% year over year, net profit after deducting non-return to mother was 255 million yuan, +17.99% year over year.
Benefiting from rising gold prices and the release of consumer demand, investment products and gold jewelry have led to rapid revenue growth. Split by product:
In 2023, gold jewelry achieved revenue of 6.159 billion yuan, +54.11%; precious metal investment products achieved revenue of 8.884 billion yuan, +55.79%; precious metal cultural products achieved revenue of 1,109 billion yuan, +18.41% year over year; Diancui Jewelry achieved revenue of 214 million yuan, +0.07% year over year; joint commission revenue of 173 million yuan, +32.34% year on year; gold jewelry, precious metal investment products, precious metal cultural products, diamond jewelry, and joint venture commission revenue accounted for 37.2% of revenue , 53.7%, 6.7%, 1.3% and 1.0%, +0.8, +1.8, -0.7, -0.1 pct year-on-year. Split by channel: In 2023, sales of online channels, offline channels, and banking channels were 30.17, 133.11 billion yuan, and 210 million yuan, respectively, +105.1%, +42.6%, and +20.3%, respectively, accounting for +4.84, -4.53, and -0.32 pct of sales, respectively. In 24Q1, revenue was 6.316 billion yuan, +25.01% year over year, of which retail revenue of gold and jewellery was 6.266 billion yuan, +25.45% year over year, or mainly driven by growth in investment products. Joint venture commissions were 45 million yuan, -14.32% year over year.
Fluctuations in gold prices led to changes in product structure, and gross margin declined year on year. 1) Gross margin side: In 2023, gross margin was 10.68%, -0.54 pct year-on-year. By product, the gross margin of gold jewelry, precious metal investment products, precious metal cultural products, diamond jewelry, and joint venture commission was 17.85%, 2.79%, 14.16%, 39.52%, 95.72%, -0.44, -0.01, +1.47, -3.59, and +2.09pct. The year-on-year reduction in gross margin was mainly due to the increase in the proportion of precious metals investment products faster than gold jewelry, and the gross margin of precious metal investment products and gold jewelry declined somewhat due to the internal structure. In 24Q1, gross margin was 10.00%, or 1.37 pct year-on-year, or an increase in the share of revenue from precious metals investment products. The Q1 investment bar handling fee did not affect the overall gross profit margin based on upward adjustments in gold prices, as well as a combination of factors such as an increase in the gold jewelry “trade-in” business. 2) Expense rate side: In 2023, sales rates, management rates, R&D rates, and financial rates were 2.62%, 0.68%, 0.05%, and 0.19%, year-on-year, -0.58, -0.23, -0.04, and +0.02 pct, respectively. In 24Q1, the sales rate, management rate, R&D rate, and financial rate were 0.70%, 0.20%, 0.02%, 0.07%, +0.07 pct compared to the same period, compared with +0.07, -0.03, -0.02, and +0.03 pct, mainly due to cost dilution due to revenue growth. 3) Net margin side: Based on gross margin and rate conditions, in 23 years, the net interest rate was 4.29%, +0.10 pct year on year; in 24Q1, the net margin was 4.33%, -0.34 pct year on year.
Tuodian consolidates the Beijing-Tianjin-Hebei layout, exploits growth potential in non-North China regions, and boosts the rapid development of online business. 1) Offline channel situation:
The company adheres to the full direct chain operation model and actively expands sales channels. In '23, 19 new offline stores were opened, and 3 of the newly opened stores were selected to set up image stores with the theme of “Passing on the World of Food” sub-brand. By the end of '23, it had 87 direct-run chain stores covering all administrative districts of Beijing and Tianjin, Hebei, Baotou, Xi'an, and Suzhou, with a net increase of 17 direct-run stores. In 24Q1, the number of direct-run stores was reduced by 1, and in 24Q2, it is planned to add 4 new stores in Beijing. 2) Online channel situation: In 2023, the online subsidiary achieved revenue of 2,982 billion yuan, +102.55%; the company has launched online sales cooperation with 8 external e-commerce platforms including JD, Tmall, and Douyin. In 2023, online channel sales totaled 3,017 billion yuan, accounting for 18.24% of total sales.
Release the 2023 profit distribution plan. The 2023 profit distribution plan is based on a total share capital of 778 million shares. A total cash dividend of 544 million yuan (tax included) is proposed, accounting for 77.03% of the net profit attributable to mother in 2023.
Provide a “one-stop” shopping service experience and explore the development of multi-product matrices. ① Beijing Main Store: The main store provides a “one-stop” shopping service experience to establish consumer brand awareness. The company's Beijing main store is a leading single retail store in the domestic gold and jewelry industry, with a business area of 8800 square meters, providing consumers with an immersive shopping experience integrating “museum-style appreciation, dissemination of professional knowledge, experiential shopping, and personalized customization”. ② Offline channels: Under the offline direct management model, performance flexibility is evident. The direct management model strengthens the control of operating gross profit margin and expense ratio to ensure service quality. ③ Channel expansion: Offline direct sales continue to increase, and online channels expand consumer coverage. The company is developing an omnichannel marketing strategy and is expected to break the regional circle in the future. ④ Product Matrix: The product matrix is being improved and cultural IP continues to be empowered. Focus on product emotional interactive design, continue to explore cultural IP, and explore the development of multi-brand matrices.
Investment advice: In 2024-2026, the company is expected to achieve operating income of 210.32, 248.30, and 27.922 billion yuan, respectively; net profit to mother will be 8.21, 9.26 and 1.02 billion yuan, respectively, +16.1%, +12.9%, and +8.2%. The PE corresponding to the closing price on April 26 is 13/12/11 times, maintaining the “recommended” rating.
Risk warning: Competition in the industry intensifies; store expansion falls short of expectations; terminal demand falls short of expectations.