Guoquan Food (Shanghai) (2517) H2 2023 earnings summary

Executive summary

• FY2023 revenue fell 15.0% YoY to RMB6,094.1m, while gross profit rose 8.2% and net profit rose 9.3%.

• Adjusted net profit increased 23.8% YoY to RMB318.0m; the Board recommended a final dividend of RMB0.0521 per share, subject to shareholder approval.

• The retail network expanded to 10,307 stores across 31 provinces, autonomous regions and municipalities at year-end.

Financial highlights

• Revenue was RMB6,094.1m, down 15.0% YoY; gross profit was RMB1,350.9m, up 8.2%.

• Net profit rose 9.3% YoY to RMB263.4m; profit before tax increased 9.5% to RMB363.4m.

• Adjusted net profit, excluding share-based payment and listing expenses, was RMB318.0m, up 23.8% YoY; adjusted margin was 5.2% vs. 3.6%.

• Operating cash generated was RMB678.3m vs. RMB285.3m in 2022; cash and bank deposits totaled RMB1,935.7m at year-end.

Outlook and guidance

• Plans include deeper store penetration in existing regions, entry into new regions, more store formats and continued recruitment and development of franchisees.

• Online growth priorities include Guoquan APP, WeChat mini-program, food delivery platforms and Douyin, with physical stores developed as pickup hubs and satellite warehouses.

• Product plans include more categories and localized offerings, campsite dining expansion, increased R&D investment and continued one-product-one-factory development for core products.

• Digital initiatives target improved inventory turnover, demand and freshness monitoring, lower fulfillment costs, and stronger membership engagement and precision marketing.