JH Group(SH:603518) Soochow Securities·2024-04-30 12:00Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for future performance [5]. Core Insights - The company reported a revenue of 4.545 billion yuan in 2023, representing a year-over-year increase of 16.55%, and a net profit attributable to shareholders of 298 million yuan, a significant increase of 316.76% year-over-year. This growth is attributed to improved sales and a reduction in financial expense ratios [2][5]. - In Q1 2024, the company achieved a revenue of 1.153 billion yuan, a slight decline of 1.24% year-over-year, while the net profit attributable to shareholders rose by 13.19% to 116 million yuan, driven by a slight increase in gross margin and further reductions in financial expenses [2]. - The company has successfully transitioned from a direct sales model to a franchise model, with notable revenue growth across its brands, particularly in the TW brand, which saw a revenue increase of 16.7% in 2023 [2]. Financial Performance Summary - For 2023, the company reported total revenue of 4.545 billion yuan and a net profit of 298 million yuan, with respective growth rates of 16.55% and 316.76% [4]. - The company's gross margin for Q1 2024 improved to 70.2%, an increase of 0.82 percentage points year-over-year, primarily due to enhanced discount strategies [2]. - The company’s cash flow from operating activities for 2023 was 933 million yuan, with a projected increase in cash flow for 2024 [11]. Future Projections - The report projects net profits for 2024 and 2025 to be 373 million yuan and 434 million yuan, respectively, with corresponding price-to-earnings ratios of 10x and 8x [5]. - The company is expected to continue optimizing its channel structure, with a focus on franchise expansion, which is anticipated to further enhance profit margins [2].