Incident: Taobo announced FY24 annual results. During the period, the Group achieved revenue of 28.93 billion yuan, +6.9% year on year; gross profit of 12.08 billion yuan, gross profit margin of 41.8% year on year, +0.1ppt year on year; net profit to mother of 2.21 billion yuan, 20.5% year on year, net interest rate 7.6% year on year, +0.8ppt year; annual dividend payment of 2.23 billion yuan, 0.36 yuan per share, payout rate of 101%, and cumulative dividend rate over the past five years.
High-quality revenue growth during the period, +6.9% year-on-year. 1) By channel: FY24 Group's retail and wholesale business achieved revenue of 24.70/4.0.2 billion yuan respectively, +8.9%/-3.3% year-on-year, accounting for 85.4%/13.9%.
During the period, the Group focused on high-quality expansion of offline channels and upgraded the store structure. Offline: By the end of FY24, the number of directly-managed stores was 6,144, and 421 were closed, and the pace of closing was slowing down. The big store strategy was effective. The gross sales area resumed month-on-month growth, and the single-store sales area was +6% compared to the same period; online:
During the period, the Group accelerated the layout of new online platforms, and the proportion of direct online sales increased to 20-30% of total direct sales (20-30% lower in the same period last year); 2) By brand: FY24 Group's main brands and other brands achieved revenue of 248.3/3.89 billion yuan, +6.5%/+10.5% over the same period last year. Among them, the weighted sales volume of brands whose year-on-year growth rate was higher than the Group's total revenue growth rate (i.e. +6.9%) increased by 10-20% in the mid-year period, and the weighted sales volume of brands whose year-on-year growth rate was lower than the Group's total revenue growth rate during the period decreased by the number of units (if the influence of Adidas channel adjustments during the period were excluded, the number of units that increased lower than the number of units affected by Adidas channel adjustments during the period).
Inventory and discounts continued to improve, and business conditions were steady. The number of inventory turnover days for the FY2024 Group was 136.1 days, down 13.4 days from the previous fiscal year. The number of trade account turnover days was 15.1 days, +0.5 days compared to the previous year. The number of trade payables turnover days was 15.0 days, -7.2 days year on year, mainly due to short-term fluctuations caused by the Lunar New Year Festival and the wrong fiscal year. The year-on-year improvement in retail and wholesale channel discount rates led to an increase in gross margin during the period.
Profit prediction and valuation: As a leading sports retail leader, Taobo will continue to enjoy beta-level benefits while strengthening its alpha attributes through a series of actions. We expect FY2025-2027 to reach 30.22 billion yuan/32.54 billion yuan/34.53 billion yuan, +4.5%/+7.7%/+6.1% year-on-year; net profit to mother will be 2.35 billion yuan/2.58 billion yuan/2.81 billion yuan, respectively, +6.4%/+9.7%/+8.9% year-on-year, maintaining the “buy” rating.
Risk warning: Sales of major brands have weakened beyond expectations, slow recovery in discount rates, macroeconomic impacts, etc.