Introduction to this report:

The 2023 results were in line with expectations. The 24Q1 revenue side was in line with expectations. The profit side was slightly lower than expected due to short-term capital expenditure increases, marketing and digital equipment sales, and new store losses, but it is still in a stage of rapid growth, and profits are expected to gradually improve.

Key points of investment:

Investment advice: Considering that leading restaurants are under supply recovery pressure in the short term, the 2024-2025 forecast EPS will be lowered to 1.41 (-4%) /1.79 (-3%) /2.2 yuan. Considering the average industry valuation of 24xPE, the company is still giving 25xPE higher than the industry average during the rapid growth stage, and the corresponding target price reduction of 35.29 (-12%) yuan will be given to maintain an increase rating.

Performance summary: The company achieved revenue of 2,401 million yuan/ +44%, gross profit of 639 million yuan/ +109%, gross profit of 26.62% /+8.29pct, net profit of 304 million yuan/ +225%, net profit of 253 million yuan/ +240%; 24Q1, the company's revenue of 691 million yuan/ +28%, gross profit of 170 million yuan/ +27%, gross profit of 24.66%/-0.28pct, net profit to mother of 66 million yuan/ -8.84% deducted 100 million yuan/+ 5.32%

The revenue side was in line with expectations, and the number of preparatory stores was abundant. ① By 23, the company had 106 direct-run stores, including 53 restaurants in Tongqinglou, 4 Fumao, and 49 new brands (16 large packages); in '23, the company opened 8 new stores, including 6 restaurants (4 restaurants, 2 wedding banquets), 2 hotels, and a store area of 530,000 square meters/ +29% by '23. It is planned to achieve 800,000 square meters/ +50% in 24. By the end of 23, a total of 6 Fumao stores were opened, including 2 new restaurants (Beicheng, Fuyang) (in preparation) Gaoxin, Feixi, Shanghai).

Increased short-term capital expenditure and new store openings affect profitability. The new store lost 3.65 million yuan during the climbing period; increased investment of 4.5 million yuan in marketing and digital construction; cash and financial management revenue decreased by 1.83 million yuan and additional interest expenses of 3.46 million yuan, which had a total impact of 5.2912 million yuan. After excluding non-net profit, the increase in revenue converged.

Risk warning: food safety risk; risk of repeated outbreaks; store opening less than expected.