Jinwu Financial News | According to Anxin International Development Research, 361 degrees (01361) recorded revenue of 8.423 billion yuan, an increase of 21.0% year on year, of which children's clothing revenue was 1,958 billion yuan, up 35.7% year on year, accounting for 23.2% of revenue; e-commerce revenue was 2,326 billion yuan, up 38.0% year on year, accounting for 27.6% of revenue. The company's children's clothing business has a first-mover advantage and has continued to grow rapidly in recent years. The company's e-commerce business uses a full direct management model, exclusively for online products, and is separated from offline products to effectively prevent channel smuggling.
According to the bank, in terms of the company's store network, by the end of 2023, there were 6994/2545 sales outlets, a net increase of 254/257 over the previous year, and it is expected that the pace of net store opening will be maintained in the future; the area of a single large clothing/children's clothing store was 138/103 m2, an increase of 9/11 m2, respectively. Gross margin increased by 0.6 pp to 41.1% year on year, with gross margin of footwear and children's clothing increased by 1.2/0.9 pp to 42.4%/41.8% year on year, respectively. Influenced by the increase in revenue and gross margin, the net profit margin to mother increased by 0.7 pp to 11.4% year on year, and net profit to mother also increased 28.7% year over year to 961 million yuan, exceeding market expectations. Furthermore, based on the continued improvement in the operating situation in 2023, the company announced the resumption of dividends, paying HK20.4 cents per common share, with a dividend payout ratio of 40.2% for the whole year.
The bank said that after the company was included in the Hong Kong Stock Connect last year, market attention was further increased, and the brand's popularity increased after the Asian Games. Management explained that in the future, the company will also sponsor more large-scale events to help raise the brand's voice. Based on comprehensive considerations, the bank predicts EPS of $0.54/0.62/0.70 for 2024/2025/2026. Referring to historical valuation levels, it will give 2024 12 times PE and a target price of HK$6.9, maintaining a “buy” rating.