23H1's performance fell within the forecast range, with revenue growth of 19.8%. In the first half of the year, the number of self-operated / licensed stores increased by 961,181 respectively. The store opening strategy increased the layout of high-potential stores such as transportation hubs to consolidate the original advantages. Last year, the profit margin improved significantly under the low base. Looking forward to the whole year, the company's goal of opening a store will remain unchanged, on the one hand, consolidate the advantages of high-potential stores, and on the other hand, explore more community scenarios, including the attempt of sub-brands. The price of raw materials on the profit side has fallen since the second quarter, and cost pressure is expected to improve in the second half of the year. Taking into account the speed of store recovery and cost pressure, we have lowered our 23-24 net profit forecast to 223 million / 395 million, and the current valuation corresponds to 31 times / 18 times PE in 24 years, maintaining the "overweight" rating.
23H1 performance falls within the forecast range and adopts a high dividend strategy. The company disclosed its half-year results in 2023. In 2023, H1 realized revenue of 1.415 billion yuan, year-on-year + 19.8%, and net profit of 102 million yuan, + 454% compared with the same period last year. The revenue and profit was basically consistent with the previous forecast, and the year-on-year increase was mainly due to the gradual recovery of offline store business. The company declared an interim dividend of HK $0.12 per share, totaling about RMB 263 million.
Keep up with the changes and adjust the store opening strategy, and actively promote new and pull growth. By the first half of 2023, Zhou's Black Duck had a total of 3706 stores, including 1542 self-operated stores, a net increase of 96 H1 stores, 2164 franchised stores and a net increase of H1 stores. From a regional point of view, the number of H1 in Central China / South China / East China / North China / West China increased by 31pm 82max / 52max 62 respectively. Seizing the window of pick-up of passenger flow and repair of consumption scene in the first half of the year, the company increased the layout of transportation hubs and high-potential business circle stores, further consolidated its original advantages, and summed up and optimized the experience of high-quality store location in the community. In the first half of the year, the number of transportation hub / business district, business body, merchant super / community / other stores was 2242232ame860max respectively, with a net increase of 46pm and 13368ax respectively. From the performance of individual stores, the recovery of stores in transportation hubs is faster, while that in business circles and communities is slower. In terms of product innovation, the company continues to make efforts in taste and category to tap consumer groups.
The terminal tax sales of the new products of H1 company (within one year on the market) account for more than 20%, of which the tax sales of the slightly spicy series products are nearly 300 million yuan, and the terminal tax sales of shrimp ball series products exceed 120 million yuan.
Under the low base, the net interest rate improved significantly, and the rise in the price of raw materials dragged down the gross profit margin. 23H1 achieved a gross profit margin of 52.5%, down 4.4pcts from a year earlier, mainly due to a sharp rise in the price of duck sub-raw materials in the first half of the year. We estimate that the cost per ton is + 20.7% compared with the same period last year. H1 company sales expense rate 33.5%, year-on-year decline 9.3pcts, mainly due to store efficiency recovery and transportation costs, rental costs, etc., management expense rate 11.3%, slightly lower 0.1pct compared with the same period last year, equity incentive fees and credit impairment losses have increased in absolute terms. With a low base in the same period last year, the company's H1 net interest rate was 7.2%, an improvement in 5.6pcts compared with the same period last year.
Investment advice: the goal of opening a store will remain unchanged throughout the year, look forward to a drop in H2 costs, and maintain the "overweight" rating.
Throughout the year, the company's goal of opening stores remains unchanged, strategically pay close attention to the window period for the recovery of travel population, increase the layout of high-potential stores, consolidate the original advantages, explore more consumption scenes in the community, cultivate sub-brands, and create a new growth curve. Profit-side raw material prices began to fall from the high in the second quarter, and cost pressure is expected to ease in the second half of the year compared with the first half. Taking into account the speed of store recovery and cost pressure, we lowered our 23-24 net profit forecast to 223 million / 395 million, and the current valuation corresponds to 31 times / 18 times PE in 24 years, maintaining the "overweight" rating.
Risk hint: rising costs and periodic intensification of competition in the industry