LBX(SH:603883) Bank of China Securities·2025-06-13 02:23Core Insights - The report highlights that the company, Lao Bai Xing, experienced a decline in revenue and profit in 2024, with revenue at 22.358 billion yuan, down 0.36% year-on-year, and net profit at 519 million yuan, down 44.13% year-on-year [2][6] - Despite short-term profit pressures, the company is expected to improve its profitability through the expansion of its franchise business and the Torch project [2][6] Financial Performance - In 2024, the company reported total profits of 916 million yuan, a decrease of 34.94% year-on-year [2][6] - For Q1 2025, revenue was 5.435 billion yuan, down 1.88% year-on-year, with net profit at 251 million yuan, down 21.98% year-on-year [2][6] Business Expansion - As of Q1 2025, the company has a sales network covering 18 provincial markets and over 150 cities, with a total of 15,252 stores, including 9,844 direct-operated and 5,408 franchise stores [8] - The company added 211 new stores in Q1 2025, with 187 being franchise stores, indicating a rapid growth in its franchise business [8] Profitability Improvement Initiatives - The Torch project is aimed at enhancing profitability, with Q1 2025 achieving a gross margin of 34.22%, reflecting a 0.70 percentage point increase in offline sales gross margin year-on-year [9] - The company is diversifying its projects to increase the proportion of non-pharmaceutical sales and is leveraging mobile internet technology for new customer engagement models [9]