LBX(SH:603883) Huajing Securities·2024-05-21 05:02Investment Rating - The report maintains a "Buy" rating for the company with an updated DCF target price of RMB 44.31, reflecting a 26% upside potential from the closing price on May 6 [1][4][14]. Core Insights - The company is expected to achieve a revenue and net profit CAGR of 19% and 24% respectively from 2023 to 2026, driven by strong growth in emerging business segments and rapid online sales growth [1][2]. - The company reported 2023 revenues and net profits of RMB 22.44 billion and RMB 0.93 billion, representing year-on-year growth of 11% and 18% respectively [1][8]. - The company is focusing on expanding its store network in advantageous provinces and penetrating lower-tier markets, with a total of 14,109 stores as of Q1 2024 [1][2]. Financial Performance - In Q1 2024, the company achieved revenues and net profits of RMB 5.54 billion and RMB 0.32 billion, showing a year-on-year growth of 2% and 10% respectively [1][8]. - The gross margin improved to 35.2% in Q1 2024, up 2.2 percentage points year-on-year, attributed to the implementation of the Torch Project [2][8]. - The company plans to open 4,000, 5,000, and 6,000 new stores in 2024, 2025, and 2026 respectively, focusing on advantageous provinces and key cities [1][2]. Revenue and Profit Forecasts - The company’s revenue is projected to reach RMB 27.04 billion in 2024, RMB 32.42 billion in 2025, and RMB 38.24 billion in 2026, with corresponding net profits of RMB 1.14 billion, RMB 1.47 billion, and RMB 1.76 billion [3][12][20]. - The report indicates a downward adjustment in the 2024-2025 profit forecasts due to a slowdown in acquisition speed and capital expenditure [11][14]. Market Position and Competitive Landscape - The company is actively expanding its online sales channels, with online sales reaching approximately RMB 2 billion in 2023, a 38% increase year-on-year [2][8]. - The company holds a significant market share in 11 provinces, with four of them being the top market share holders [1][2]. Valuation Metrics - The target price corresponds to a 2024 P/E ratio of 23x, which is higher than the industry average of 16x, indicating a premium valuation due to strong growth prospects [4][14].