Event: Heilan House announces 2023 and 24Q1 results. In 2023, the company's revenue/net profit to mother/ net profit after deduction was 21,528 billion yuan/2,710 billion yuan, respectively, +16%/+37%/+31%, respectively; of these, 23Q4 company's revenue/net profit/net profit after deduction was 5.958 billion yuan/500 million yuan/487 million yuan, respectively, +22%/+23%/57%; the company plans to pay dividends of every 10 shares for the full year of 2023, with a dividend rate of 91.1%. In the first quarter of 2024, the company's revenue/net profit attributable to mothers/net profit after deduction were 6.177 billion yuan/887 million yuan/887 million yuan, respectively, +9%/+10%/+11% compared with the same period last year.
Direct sales channels grew significantly in '23, and gross margin performance was steady. Revenue side: 1) By brand, the company's main brand/group purchase/other brands had revenue of 16.458 billion yuan/2,281 billion yuan/2,016 billion yuan respectively, +20%/+1%/+6% year-on-year, respectively. 2) By channel, the company's online/franchise/direct sales channels had revenue of 3.258 billion yuan/4.533 billion yuan/13.941 billion yuan respectively in '23, +14%/+49%/+10%, respectively. By the end of '23, the total number of the company's stores reached 6,877, of which the main brand's direct-managed/franchised stores were 1,252 and 4724, respectively, with net openings of +198 home/-164 compared to '22; other direct-managed/franchised stores closed 93 and 1,283 stores respectively over the same period in '22, mainly due to the divestment of male and female brands. Profit side: The company's gross margin in '23 was 44.5%, +1.6ppt. Among them, the gross margins of the main brand/ group purchase/other brands were 45.2%/46.8%/50.2%, respectively, +3.0pp/ -1.8pp/ -2.0ppt.
The 24Q1 group buying and online business performed well. 24Q1's revenue was 6.177 billion yuan, +9% YoY, of which the main brand/ group purchasing/other brands had revenue of 5.130 billion yuan/550 million yuan/371 million yuan, respectively, +6%/+54%-25%; online channel revenue was 847 million yuan, +34% YoY; and gross margin and net margin were 46.7% and 14.4% respectively.
Our view: Heilan Home operates steadily and has a clear development path in the short term. We expect the company EPS to be 0.74 yuan/0.81 yuan/0.86 yuan respectively in 2024-2026, maintaining the “buy” rating.
Risk warning: Online channel development falls short of expectations, overseas market expansion falls short of expectations, small brand cultivation falls short of expectations, macroeconomic impact, changes in consumer preferences