JH Group(SH:603518)2024-04-30 08:30Investment Rating - The report maintains a "Buy" rating for the company [1][22]. Core Views - The company reported a revenue increase of 16.55% year-on-year to 4.545 billion RMB in 2023, with a significant net profit growth of 316.76% to 298 million RMB. The first quarter of 2024 saw a slight revenue decline of 1.24% to 1.153 billion RMB, while net profit increased by 13.19% to 116 million RMB [1]. - The company's brands, TW and VG, have shown continuous operational efficiency improvements, with TW's revenue reaching 3.507 billion RMB in 2023, up 16.68% year-on-year. VG's revenue was 963 million RMB, a 12.37% increase [1]. - The company is focusing on enhancing its franchise channel through a "direct to franchise" strategy, resulting in a reduction of direct stores and an increase in franchise stores [1]. - The online sales channel generated 1.737 billion RMB in 2023, reflecting a 15.02% increase, while offline sales reached 2.782 billion RMB, up 17.16% [1]. - The company is optimizing its financial structure, with a decrease in financial expenses and an improvement in profitability metrics, including a net profit margin increase to 6.55% in 2023 [1]. Summary by Sections Financial Performance - 2023 revenue was 4.545 billion RMB, with a growth rate of 16.55%. Net profit reached 298 million RMB, growing by 316.76%. The first quarter of 2024 saw revenue at 1.153 billion RMB, down 1.24%, but net profit increased by 13.19% to 116 million RMB [1][2]. - The company expects EPS for 2024-2026 to be 1.07, 1.24, and 1.39 RMB, respectively, with corresponding P/E ratios of 10, 8, and 7 times [1][2]. Brand Performance - TW brand revenue for 2023 was 3.507 billion RMB, up 16.68%, while VG brand revenue was 963 million RMB, a 12.37% increase. The company is expanding its product lines targeting new middle-class consumers [1]. - The cloud brocade brand achieved a revenue of 49.64 million RMB, growing by 120.42% [1]. Operational Efficiency - The company has improved its operational efficiency, with a gross margin of 69.20% in 2023 and a further increase to 70.20% in Q1 2024. Financial expense ratios decreased, leading to enhanced profitability [1][2].