DSL(603233) Guotai Junan Securities·2024-11-01 06:09Investment Rating - The report maintains a "Buy" rating for the company [2][6]. Core Views - The company has achieved rapid revenue growth due to its expansion outside the province, although profitability is under pressure. Efforts to optimize gross margin and cost structure are showing initial results [2][4]. - For Q3 2024, the company reported revenue of 6.386 billion yuan (+11.4%) and a net profit attributable to shareholders of 201 million yuan (-22%). The performance is generally in line with expectations [4]. - The EPS forecast for 2024-2026 has been revised down to 0.90/1.06/1.23 yuan from the previous 1.07/1.24/1.43 yuan, reflecting the impact of rapid expansion on profitability [4]. Revenue and Profitability - The company’s revenue for Q3 2024 was 6.386 billion yuan, with retail and wholesale segments achieving revenues of 5.287 billion yuan (+13.0%) and 978 million yuan (+12.5%) respectively [4]. - The gross margin for Q3 2024 was 34.2%, down 2.0 percentage points, but the decline has narrowed. The pressure on gross margin is primarily due to the lower margin from the increased share of out-of-province sales [4]. - The company is actively implementing cost control measures, with management expenses showing a decreasing trend [4]. Business Expansion - As of Q3 2024, the total number of stores reached 16,453, with a year-on-year growth of 27% for total stores and 15% for direct stores. However, the pace of new store openings has slightly slowed, and 452 stores were closed in the first three quarters of 2024 [4][6]. - The company is focusing on optimizing operational quality through the closure of underperforming stores [4]. Financial Summary - The company’s total revenue is projected to grow from 24.531 billion yuan in 2023 to 36.235 billion yuan in 2026, reflecting a compound annual growth rate of approximately 14% [5][10]. - The net profit attributable to shareholders is expected to decline in 2024 to 1.022 billion yuan, before recovering to 1.406 billion yuan by 2026 [5][10]. - The company’s price-to-earnings ratio is projected to be 16.15 in 2024, decreasing to 11.73 by 2026 [5][10].