Peacebird(603877) Changjiang Securities·2025-04-23 10:35Investment Rating - The report maintains a "Buy" rating for the company [6]. Core Views - In the short term, the company is expected to see a recovery in profit growth due to the nearing end of store closures, gradual retail improvement, and enhanced franchise gross margins. In the long term, structural adjustments within the company are anticipated to significantly improve operational quality and profit elasticity. The company is shifting from profit elasticity driven by high retail growth to a more sustainable and robust internal capability-driven profit elasticity. The projected net profits for 2025, 2026, and 2027 are estimated at 360 million, 470 million, and 560 million yuan, respectively, with corresponding PE ratios of 21, 16, and 14 [2][4][11]. Financial Performance - For Q1 2025, the company reported revenues of 1.67 billion yuan, a year-on-year decrease of 7.6%. The net profit attributable to the parent company was 120 million yuan, down 22.0% year-on-year, while the net profit excluding non-recurring items was 90 million yuan, a decline of 20.7% [4][11]. - The company’s gross margin improved by 4.8 percentage points in Q1, while the net profit margin decreased by 1.4 percentage points to 7.4% due to negative operating leverage [11]. - The company’s inventory stood at 1.64 billion yuan, reflecting a year-on-year increase of 20% and a quarter-on-quarter decrease of 6% [11]. Brand and Channel Performance - Revenue from various brands showed a decline in Q1, with women's clothing down 12.8%, men's clothing down 6.7%, and children's clothing down 6.6%. However, gross margins for these categories improved significantly [11]. - In terms of sales channels, direct sales, franchise, and online revenues decreased by 3.6%, 12.7%, and 12.7% respectively, with franchise gross margins seeing a notable increase [11]. Future Outlook - The company is expected to experience a rebound in profit growth as store closures come to an end, retail conditions improve, and franchise gross margins enhance. The long-term outlook remains positive with anticipated structural adjustments leading to improved operational quality and profit elasticity [2][11].