LuoLai Lifestyle Technology (002293) 光大证券·2024-04-28 06:02Investment Rating - The report maintains a "Buy" rating for Luolai Lifestyle (002293 SZ) with a target price of 9 50 RMB [1] Core Views - Luolai Lifestyle's home textile business showed steady growth in 2023 with a 3% YoY increase in revenue while the US furniture business experienced a 12% decline dragging down overall performance [10] - The company is expected to recover in 2024 with continued channel expansion improved operational capabilities and strengthened brand building [4] - The high dividend payout ratio is a key highlight with a projected dividend yield of at least 6 3% based on the closing price on April 26 2024 [4] Financial Performance - In 2023 the company reported revenue of 5 315 billion RMB a slight increase of 0 03% YoY and net profit attributable to shareholders of 572 million RMB a decline of 1 44% YoY [1] - Q1 2024 saw a significant drop with revenue down 12 26% YoY to 1 088 billion RMB and net profit down 49 47% YoY to 89 49 million RMB primarily due to weaker performance in the US furniture business and reduced government subsidies [1] - Gross margin improved by 1 31 percentage points to 47 27% in 2023 driven by higher margins in the home textile business [1] Business Segments - Home textile business accounted for 80% of total revenue in 2023 with online and direct sales channels growing by 8 65% and 31 68% respectively [1] - The US furniture business contributed 20% of revenue but saw an 11 61% decline in sales [1] - Product categories such as standard bedding sets and summer products showed positive growth while pillow products declined [1] Operational Metrics - The company expanded its store network by 2 55% in 2023 with a total of 2 730 stores including 335 directly operated stores and 2 395 franchised stores [1] - Same store sales growth for directly operated stores open for more than 12 months increased by 30 05% [1] - Inventory decreased by 17 87% to 1 344 billion RMB at the end of 2023 and operating cash flow surged by 116 73% to 936 million RMB [1] Future Outlook - The report forecasts revenue growth of 10 35% and 13 15% for 2024 and 2025 respectively with net profit expected to grow by 11 43% and 16 15% [12] - EPS for 2024 2025 and 2026 is projected at 0 76 0 89 and 1 01 RMB respectively with PE ratios of 12x 11x and 9x [11] - The company plans to continue its high dividend policy with a payout ratio of 58% in 2023 and additional dividends expected in mid 2024 [1]