Huangshanghuang(SZ:002695) Huaxin Securities·2024-04-30 07:30Investment Rating - The report maintains a "Buy" investment rating for the company [1][7]. Core Insights - The company's gross margin has improved, offsetting the rise in costs, leading to relatively stable profitability [1][5]. - The "Thousand Cities, Ten Thousand Stores" strategy is progressing steadily, with a significant increase in the number of stores [1][6]. - Short-term revenue is slightly pressured by external consumption environment, but medium-term outlook remains positive with expected operational recovery and rapid store expansion [1][7]. Financial Performance - In Q1 2024, the company achieved revenue of 458 million yuan, a decrease of 10.56% year-on-year, while net profit attributable to shareholders was 33 million yuan, down 10.08% year-on-year [5]. - The gross margin for Q1 2024 was 35.60%, an increase of 6.5 percentage points year-on-year, and the net profit margin was 6.95%, up 0.4 percentage points [5]. - The sales expense ratio increased to 14.19%, up 2.37 percentage points year-on-year, while the management expense ratio rose to 9.13%, an increase of 1.75 percentage points [5]. Store Expansion - As of the end of 2023, the company had 4,497 stores, including 262 direct-operated stores and 4,235 franchised stores, representing a net increase of 572 stores compared to the end of 2022 [6]. - The company anticipates a gradual return to normal closure rates starting in 2024, with significant market expansion opportunities [6]. Earnings Forecast - The company is expected to see earnings per share (EPS) of 0.25 yuan in 2024, 0.33 yuan in 2025, and 0.40 yuan in 2026, with corresponding price-to-earnings (PE) ratios of 32, 25, and 21 times [7][9].