The company achieved operating income of 21.53 billion yuan in 2023, an increase of 16% over the previous year, and net profit of 2.95 billion yuan, an increase of 37% over the previous year. 24Q1 revenue and net profit increased 8.7% and 10.4%, respectively. The company plans to pay 2.69 billion dollars, with a dividend rate of about 91%. A new mid-term dividend plan is added. The proposed dividend rate is not less than 70%, which exceeds market expectations.
The e-commerce business began to accelerate in 2023H2. 23H2 e-commerce business revenue increased 18% year over year, compared with 21H2 increased 23% year over year, while 23H1 increased 10% and 16% respectively. The specific changes in 2023 are as follows: 1) Product side: Adhere to the new national trend, new street trend, light business, and light sports style, and use products as traffic grippers to create a series of popular products with unique style characteristics. At the same time, we insist on empowering categories with technology and innovation, and driving sales growth with product functionality. 2) Channel aspect: Continue to increase the global operation of social platforms, live e-commerce, and content e-commerce. 3) Actively promote intelligent upgrades in product production, customer service, supply chain management, etc., and improve the operational efficiency of the entire link.
When the brand went overseas. In 2023, overseas regions achieved revenue of 272 million yuan, an increase of 23.98% over the previous year.
The company actively explores new markets, has a more international store image, enters the core business district, continuously expands its brand influence, and provides a better shopping experience for overseas consumers. In October, Heilan Home officially entered the Philippine market and opened stores in SM Fairview Mall and Robinsons Manila Mall in Manila.
Sports brand management business was added in 23: In 2023, the wholly-owned subsidiary “Shanghai Hailan” and Shanghai Haixin Sports Development Group Co., Ltd. jointly increased the capital of “SPOTS”, and “Shanghai Hailan” received 40% of SPOTS shares. In 2023 and 24Q1, the business contributed to the company's investment income of 34 million yuan and 0.1 billion yuan, respectively.
Overall performance was steady in 24Q1, and e-commerce continued to drive revenue growth. By brand, revenue from Heilan Home, Group Buying, and other brands increased 6.5%, 54.2%, and -25.1% year-on-year. The high increase in the group buying business is estimated to have declined 38% year over year in 23Q4 due to the pace of delivery; other brands declined sharply, mainly due to the launch of the “Boys and Girls” brand in 2023. By channel, e-commerce and offline revenue increased by 34% and 3%, respectively. We expect the e-commerce business to maintain a relatively rapid growth rate in 2024.
We are optimistic about the company's growth resilience, certainty, and investment value brought by long-term high dividends in the context of stratification of consumption.
According to the annual report and quarterly report, we adjusted the profit forecast and introduced the 2026 profit forecast. The earnings per share for 2024-2026 are 0.70 yuan, 0.79, and 0.87 yuan respectively (the original 2024-2025 was 0.79 and 0.92 yuan). Referring to comparable companies, a PE valuation of 15 times 2024 was given, corresponding to the target price of 10.5 yuan, to maintain the “buy” rating.
Risk warning: increased competition in the industry, weakening demand for terminal consumption, etc.