Incidents:
The company released its report for the first quarter of 2024. 2024Q1 achieved revenue of 3.72 billion yuan, a year-on-year increase of 26.0%, breaking the highest revenue in the first quarter. The 24Q1 adjusted net profit was 620 million yuan, up 27.7% year on year, corresponding to the steady performance of 16.6% after the adjusted net profit margin.
Domestic same-store pressure has been relieved month-on-month, and overseas direct sales continue to be strong
2024Q1's revenue in China increased 16.2% year on year, thanks to 1) the number of MINISO domestic stores increased by 18.7%, same-store sales recovered 98%, and same-store recovery is still on the upward trend, and the YTD recovery rate has reached 100%; 2) the number of TOPTOY stores increased 32.2% year over year, and same-store sales increased 26% year on year, continuing to grow rapidly. The company's overseas revenue once again exceeded expectations, up 52.6% year on year, due to a 92% year-on-year increase in direct market revenue, showing strong growth for 4 consecutive quarters. Looking at the breakdown, overseas store expansion and same-store growth all performed well, and all overseas regions achieved positive same-store growth. Among them, North America grew by 32%, Latin America grew by 25%, Asia grew by 19%, and Europe grew by 13%.
Brand upgrades continue to be implemented, and gross margin continues to break through upward
The gross margin of 2024Q1 was 43.4%, up 4.1pct/month-on-month increase of 0.3pct, mainly due to increased direct market revenue contribution and TOPTOY product portfolio optimization. Looking at the breakdown, the gross margin of mainland China/overseas direct management/overseas agent/TOPTOY all increased, and TOPTOY's gross margin increased by 8 pcts year-on-year, achieving positive profits for 2 consecutive quarters. On the cost side, 2024Q1 sales expenses increased 58.5% year on year, corresponding to the year-on-year increase in sales expenses, mainly due to increases in personnel expenses, logistics expenses and other expenses related to the company's business growth; management expenses increased 23.3% year over year, and the corresponding management expenses rate remained stable at 5.1%. Overall, investment on the cost and expense side leveraged revenue growth. 2024Q1 adjusted net profit of 620 million yuan, an increase of 27.7% over the previous year, and the high quality of performance was achieved.
TOPTOY has reached an inflection point, IP strategy continues to advance
After 3 years of development, TOPTOY's business gradually matured, and the high growth in business revenue strengthened the company's confidence in rapid expansion, so the target for opening stores this year was raised from 50 stores at the beginning of the year to 100. In addition, the company's IP transformation capabilities have continued to be verified. The phenomenal rise helped the company accumulate more experience and support the company to steadily reach its 5-year goal. According to data, the sales share of IP products reached 26% this quarter, and the share of domestic and overseas IP increased.
Profit Forecasts, Valuations, and Ratings
Due to the company's fiscal year adjustments, we expect the company's 2024-2026 revenue to be 174.6/210.1/25.22 billion yuan, respectively, with comparable growth rates of 26.1%/20.4%/20.0%, respectively, net profit to mother of 28.7/34.9/4.27 billion yuan, comparable growth rates of 27.3%/21.8%/22.1%, and EPS of 2.3/2.8/3.4 yuan/share, respectively. In view of the company's supply chain advantages and the strengthening of IP transformation capabilities, the global strategy continues to advance. Referring to comparable company valuations, we gave the company 24 times PE in 2024, with a target price of HK$59.02 (exchange rate: RMB 1 = HK$1.08), maintaining the “gain” rating.
Risk warning: Market competition intensifies; store expansion falls short of expectations; overseas market development falls short of expectations, etc.