Guoxin Securities reported that Virgin's (02199) FY2023 revenue fell 5.6 per cent year-on-year to HK $7.88 billion, net profit fell 26 per cent to HK $380 million, and adjusted net profit fell 20 per cent. The decline in revenue was mainly due to the decline in orders due to brand destocking in the second half of 2023 and the impact of high overseas inflation on demand. FY20232H's revenue / net profit fell 23% to 32.7 / 70 million Hong Kong dollars, respectively, dragging down full-year results. Sub-business, year-on-year changes in lingerie / sports products / other income year-on-year-6% Universe 11% Universe 29%.
The bank pointed out that the company's FY23Q4 is the trough of the business, and management expects FY241H revenue to grow by a higher number of units than FY232H, of which lingerie growth is low, sports products are flat, and the share of the Chinese market will rise from 9% to 18%. FY242H revenue is expected to achieve better growth both month-on-month and year-on-year. In the medium and long term, the optimization of product process and the promotion of automation system will help improve human efficiency. At the same time, after establishing a joint venture with Victoria's Secret China, it continues to make efforts in marketing, innovation and new retail.
The bank continued to point out that due to the greater-than-expected negative impact of poor overseas demand on orders, the company lowered its profit forecast. The company's FY2023-FY2025 net profit is expected to be 4.0 shock 5.5 / 660 million Hong Kong dollars (the original FY2023/2024 is 7.6 / 970 million Hong Kong dollars), an increase of 4%, 39% and 20% over the same period last year, and a reasonable valuation of 3.80-4.00 Hong Kong dollars (originally 4.80-5.20 Hong Kong dollars) due to a lower profit forecast. Maintain the "buy" rating for FY2025PE8.5-9.0x.