Orient Securities·2024-06-02 10:01Investment Rating - The report maintains a "Buy" rating for the company [4][6]. Core Insights - The company reported FY1Q24 earnings that exceeded expectations, with revenue of 260.05 billion yuan, a year-on-year increase of 7.0%, and a Non-GAAP net profit of 8.90 billion yuan, up 17.2% year-on-year [1]. - Product revenue for FY1Q24 reached 208.51 billion yuan, growing by 6.6%, driven by the recovery of daily necessities in large supermarkets [1]. - Service revenue for FY1Q24 was 51.54 billion yuan, an increase of 8.8% [1]. - The company's gross margin improved to 15.3%, up 0.47 percentage points year-on-year, with various expense ratios showing slight changes [1]. - The company emphasized shareholder returns, repurchasing a total of 1.3 billion USD worth of shares from January 1, 2024, to May 15, 2024 [1]. Financial Forecast and Investment Recommendations - The revenue forecast for 2024-2026 is adjusted to 1,157.38 billion yuan, 1,222.48 billion yuan, and 1,299.48 billion yuan, respectively, with adjusted net profits of 35.9 billion yuan, 37.7 billion yuan, and 40.2 billion yuan [2][6]. - The company is valued at 3,797 billion yuan based on a 2024 PE ratio of 11x for its retail business, corresponding to a target share price of 131.1 HKD [2][9].