Core views
In 2023, the company achieved operating income of 16.552 billion yuan, +50.61% year on year; realized net profit of 707 million yuan, +53.61% year over year; realized net profit without deduction of 658 million yuan, +62.18% year on year. With 2024Q1, the company achieved operating income of 6.316 billion yuan, +25.01% year over year; realized net profit of 272 million yuan, +16.15% year over year; realized net profit after deduction of 255 million yuan, +17.99% year over year. In 24Q1, China's gold consumption of jewelry was 183.922 tons, a year-on-year decrease of 3%; in 24Q1, China Gold and Jewelry Association zero increased 4.5% year-on-year. Despite having a high sales base in 23Q1, the 24Q1 company achieved impressive growth in revenue and performance, which was significantly better than the industry average.
occurrences
In 2023, the company achieved operating income of 16.552 billion yuan, +50.61% year on year; realized net profit of 707 million yuan, +53.61% year over year; realized net profit without deduction of 658 million yuan, +62.18% year on year.
With 2023Q4, the company achieved operating income of 4.183 billion yuan, +69.75%; realized net profit of 115 million yuan, +11.33% year-on-year; realized net profit of 116 million yuan after deduction, +41.62% year-on-year.
With 2024Q1, the company achieved operating income of 6.316 billion yuan, +25.01% year over year; realized net profit of 272 million yuan, +16.15% year over year; realized net profit of 250 million yuan after deduction, +17.99% year over year.
Brief review
High base, high growth, and the company's performance is impressive. The company's gold and jewelry sales growth rate is significantly higher than the industry average. In 24Q1, China's gold consumption was 308.905 tons, up 5.94% year on year. Among them, gold jewelry was 183.922 tons, down 3% year on year; gold bars and coins were 106.323 tons, up 26.77% year on year; industrial and other gold was 18.660 tons, up 3.09% year on year. In 24Q1, China Gold and Jewelry Association had zero year-on-year growth of 4.5%. Despite having a high sales base in 23Q1, the 24Q1 company achieved impressive growth in revenue and performance. Revenue increased 25% year over year, and net profit to mother increased 16% year over year.
Store expansion is progressing steadily, and store sales are growing rapidly. In 2023, the company added a total of 19 direct-run stores and closed 2 direct-run stores. 2024Q1, the company added a total of 1 direct-run store, closed 2 direct-run stores, and planned to open 4 stores in Q2. Looking at the average sales growth rate of stores by region, both mature regions and new regions achieved high sales growth: Beijing grew 43.20% year on year, Beijing main store increased 39.86% year on year, Tianjin increased 79.18% year on year, Hebei Province increased 54.22% year on year, Shaanxi Province increased 413.18% year on year, Inner Mongolia increased 57.09% year on year, and Jiangsu Province increased 126.33% year on year.
The company's dividend ratio reached 77.03%. The company plans to distribute a cash dividend of 7 yuan for every 10 shares to all shareholders. As of December 31, 2023, the total share capital of the company was 778 million shares, which is calculated to distribute a total discovery dividend of 544 million yuan. The 2023 cash dividend ratio was 77.03%.
Investment advice: We expect the company's net profit to be 834, 9.18, and 1,014 million yuan from 2024 to 2026, respectively, corresponding to 13, 12, and 11 times PE, maintaining an “increase in holdings” rating.
Risk analysis
1. The risk of fluctuations in the price of gold. Recently, international trade frictions and disputes have increased, and large fluctuations in gold prices have brought uncertainty to domestic precious metal jewelry consumption.
2. The risk of increased competition in the industry. Increased competition in the industry has led to a decline in profitability. Due to the rapid recovery in consumer demand for jewelry, major jewelry brands may increase their store expansion efforts to seize market share. If competition intensifies further, the overall profit level of the industry may decline.
3. The risk of concentration in business areas. The company's current sales area is mainly concentrated in North China with Beijing as the core, and the company's main store in Beijing accounts for a relatively high sales share. If there are major adverse changes in the economic environment, residents' incomes, etc. in North China, or competition in the regional jewelry industry intensifies, it will have an adverse impact on the company's operations.