Peacebird(SH:603877) Changjiang Securities·2024-03-27 16:00Investment Rating - The report maintains a "Buy" rating for the company [6][23]. Core Insights - In the short term, the company is expected to continue profit elasticity due to store expansion and improved profitability in direct channels. In the long term, despite a potential slowdown in revenue growth due to cost control and discount management, the quality of operations and profit elasticity will significantly improve. The company is transitioning from profit elasticity driven by high retail growth to a more sustainable and robust internal capability-driven profit elasticity. The projected net profit attributable to the parent company for 2024-2026 is 550 million, 640 million, and 730 million, with corresponding PE ratios of 14, 12, and 10 times [6][22]. Financial Performance Summary - In 2023, the company achieved revenue of 7.79 billion, net profit attributable to the parent company of 420 million, and net profit excluding non-recurring items of 290 million, with year-on-year changes of -9.4%, +127.1%, and a turnaround of 316 million respectively. In Q4 alone, revenue was 2.57 billion, net profit was 210 million, and net profit excluding non-recurring items was 150 million, with year-on-year changes of +8.0%, +538%, and a turnaround of 184 million [4][6]. Channel Performance - The women's clothing segment continues to show weak performance under ongoing adjustments, while direct sales gross margin has significantly improved. In Q4, revenue from direct sales, franchises, and online channels saw year-on-year declines of -33.5%, +0.1%, and -37.7% respectively, with gross margins changing by +6.5, -3.9, and -4.0 percentage points year-on-year. The direct sales channel experienced a significant improvement in gross margin despite a large revenue decline due to optimized product structure and strong discount management [5][21]. Cost Management and Asset Quality - The report highlights that cost optimization and improved asset quality have driven performance elasticity. By the end of 2023, inventory was 1.51 billion, down 29% year-on-year, primarily due to enhanced management of product supply and demand. The current inventory scale and structure are healthy, with only 3% of inventory being over two years old [22][21].