Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 0.8, representing a potential upside of 19.4% from the current price of HKD 0.67 [1][2][10]. Core Insights - The company is expected to see an improvement in profit margins in 2024 driven by better channel structure and retail discount stability, despite a challenging demand environment [1]. - The focus for 2024 will be on stabilizing retail discounts and improving profit margins, with a target of maintaining overall revenue flat while achieving a 1 percentage point increase in both gross and operating profit margins [1]. - The company aims for a long-term operating profit margin expansion of 1 percentage point annually, targeting a 7% margin by 2026 [1]. Financial Performance Summary - Revenue Forecast: The company’s revenue is projected to decline slightly by 1% in 2024, following an 8% increase in 2023 [2][5]. - Net Profit: The net profit is expected to increase by 28% in 2024, reaching RMB 626 million, following a significant recovery from a low base in 2023 [2][5]. - Profitability Ratios: The operating profit margin is forecasted to expand to 4.2% in 2024, up from 3.7% in 2023, with a long-term goal of 5% by 2026 [5][7]. - Valuation Metrics: The company is trading at a P/E ratio of 5.1 for 2024, indicating a relatively low valuation compared to historical levels [2][5]. Channel and Inventory Management - The company has successfully reduced inventory levels to a healthier state, which is expected to positively impact gross margins in 2024 [1]. - There has been a shift towards improving the channel structure, with a decrease in the wholesale and B2B channel revenue contribution, while B2C sales are anticipated to grow [1]. Store Performance - The company closed 570 stores in 2023, resulting in a 14% reduction in the number of direct-operated stores, but managed to achieve a 1% revenue growth in these stores, indicating improved single-store performance [1][6]. - The performance of existing stores will be crucial in determining whether the company can exceed its revenue targets for 2024 [1].
渠道结构与零售折扣同比改善有望驱动2024年利润率提升