RAINBOW(SZ:002419) Xinda Securities·2024-03-17 16:00Investment Rating - The report assigns a "Buy" rating for Tianhong Co., Ltd. (002419.SZ) based on its performance and future prospects [3]. Core Views - The company plans to issue a public REITs project using its subsidiary's shopping center as the underlying asset, which will help optimize its capital structure and maintain control over the project [2]. - For the fiscal year 2023, the company achieved a revenue of 120.86 billion yuan, a slight decrease of 0.32% year-on-year, while the net profit attributable to shareholders was 2.27 billion yuan, reflecting a significant increase of 88.75% [3]. - The company intends to distribute a cash dividend of 1.6 yuan per 10 shares, which accounts for 82.5% of the net profit for 2023 [3]. Revenue and Profit Forecast - Revenue projections for 2024-2026 are estimated at 12.6 billion, 12.8 billion, and 13.2 billion yuan, representing growth rates of 4%, 2%, and 2% respectively [2]. - The net profit attributable to shareholders is forecasted to be 250 million, 270 million, and 300 million yuan for the same period, with growth rates of 10%, 9%, and 9% respectively [2]. - The earnings per share (EPS) are expected to be 0.22, 0.24, and 0.26 yuan, with corresponding price-to-earnings (PE) ratios of 23, 21, and 19 times based on the closing price on March 15 [2]. Operational Performance - The company reported a significant increase in net profit in 2023, with a notable recovery in Q4, where the net profit was 204 million yuan, despite a year-on-year decline of 62.7% [3]. - The company has been upgrading its stores to improve operational efficiency, with a total of 41 shopping centers and 59 department stores operating across seven provinces by the end of 2023 [3]. - The comparable store sales for department stores increased by 5.25%, while the overall sales for shopping centers grew by 14.29% year-on-year [3].