Introduction to this report:
The Q1 performance exceeded expectations, and I am optimistic about the continuation of the gold consumption boom and the company's channel expansion potential.
Key points of investment:
The investment proposal's 2,023 annual report results were in line with forecasts. The Q1 results exceeded expectations, maintaining the company's 2024-2025 EPS of 1.09 yuan and 1.26 yuan respectively, and adding 1.35 yuan of EPS in 2026. Considering the high flexibility of the company's direct management, 15 xPE was given slightly higher than the industry average in 2024, and the target price was maintained at 16.35 yuan, maintaining an increase rating.
Performance summary: 2023 revenue of 16.552 billion yuan/year on year +50.61%, net profit to mother of 707 million yuan/year on year +53.61%, net profit without return to mother 658 million yuan/year on year +62.18%, net profit margin 4.3%/year on year +0.1 pct. 2024Q1 revenue was 6.316 billion yuan/YoY +25.01%, net profit to mother was 272 million yuan/YoY +16.15%, net profit after deducting non-return to mother was 255 million yuan/YoY +17.99%, net profit to mother 4.3% /y-0.3 pct/month-on-month +1.6pct.
Gold jewelry and precious metal investment products grew rapidly, and the direct management model benefited from rising gold prices. 2023 Gold Jewelry/Precious Metal Investment Products/Precious Metal Cultural Products/Diamond Jewellery Revenue +54.11%/+55.79%/+18.41%/+0.07% YoY. 2023 gross profit margin 10.7% /YoY -0.5pct; 2024Q1 gross profit margin 10.0% /YoY -1.4pct/month-on-month +0.7pct.
Direct store openings are progressing steadily, and e-commerce channels are growing rapidly. In 2023, 19 new offline stores were opened, and 3 of the newly opened stores were selected to set up image stores with the theme of the “Cai Baisheng” sub-brand. There was a net increase of 16 stores in 2023, with a total of 86 stores at the end of 2023. E-commerce subsidiaries achieved revenue of 2,982 billion yuan in 2023, +102.55% year-on-year. 2024Q1 added 1 direct-run store in Inner Mongolia and closed 1 store in Tianjin and 1 store in Shaanxi. 2024Q1 plans to add 4 new stores and is scheduled to open in 2024Q2.
Risk warning: Gold prices continue to decline, store expansion falls short of expectations, and industry competition intensifies.