Zhao Yin Guo Ji·2024-06-07 08:22Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 157.8, an increase from the previous target price of HKD 155.2 [1][25]. Core Insights - The first quarter performance indicates a strong outlook for annual profit growth, with revenue reaching RMB 73.3 billion, a year-on-year increase of 25% [1]. - Adjusted net profit for the first quarter was RMB 7.5 billion, exceeding expectations due to better-than-expected performance in the core local commerce (CLC) business [1]. - The report expresses optimism regarding the growth prospects of the company, driven by improved unit economics in on-demand delivery and increased monetization of advertising [1][4]. Financial Summary - Revenue for 2024E is projected at RMB 332.7 billion, with a year-on-year growth of 20.2% [4]. - Operating profit (OP) is expected to be RMB 32.3 billion, reflecting a significant increase from previous estimates [4]. - Non-IFRS net profit is forecasted to reach RMB 38.5 billion, indicating a growth of 11.1% compared to prior estimates [4]. Segment Performance - The CLC segment reported revenue of RMB 54.6 billion in the first quarter, a year-on-year increase of 27% [1]. - The segment's operating profit margin (OPM) improved, driven by growth in on-demand delivery transaction volume and enhanced advertising monetization [1][4]. - The report anticipates that the CLC segment will continue to show robust growth, with revenue expected to reach RMB 125 billion in the second quarter, a year-on-year increase of 17% [1]. Valuation Metrics - The report uses a discounted cash flow (DCF) model to derive a target price of HKD 157.8, based on a weighted average cost of capital of 11.0% and a terminal growth rate of 2.5% [25]. - The projected price-to-earnings (P/E) ratio for 2024E is 22.8, indicating a favorable valuation compared to industry peers [25]. Profitability and Growth - The company is expected to achieve a net profit margin of 11.6% in 2024E, with adjusted net profit projected to grow by 65.6% year-on-year [6][23]. - Revenue growth is forecasted to slow down gradually, with a compound annual growth rate (CAGR) of 20.2% from 2023 to 2024, tapering to 12.9% by 2026 [6][23].