Pou Sheng International (3813) Q4 2023 earnings summary

Executive summary

• FY23 revenue rose 7.7% to RMB20,064.5m; profit attributable to owners increased 450.0% to RMB490.4m.

• Operating margin improved to 3.7% as expenses and finance costs declined; gross margin fell 2.2 ppt to 33.7%.

Financial highlights

• Revenue increased 7.7% to RMB20,064.5m; gross profit rose 1.0% to RMB6,756.0m.

• Gross margin declined 2.2 ppt to 33.7%; selling, distribution and administrative expenses fell 4.2% to RMB6,339.9m, or 31.6% of revenue.

• Operating profit grew 77.5% to RMB735.9m; operating margin improved 1.5 ppt to 3.7%.

• Net profit rose 402.0% to RMB503.2m; profit attributable to owners increased 450.0% to RMB490.4m.

• Basic and diluted EPS were RMB9.47 cents and RMB9.46 cents, respectively, versus RMB1.72 cents for each in 2022.

Outlook and guidance

• 2024 priorities include margin-led quality growth, operational efficiency, digital transformation, channel-mix enhancement and working-capital management.

• Plans include refining the retail footprint, reducing reliance on promotions, improving in-season sell-through and using digital tools to optimise inventory and working capital.

• Three-year priorities include strengthening brand partnerships and membership operations, integrating online and offline channels, and improving store productivity and cost competitiveness.

• Digital sales contribution target remains above 25%, alongside development of private- and public-domain channels and exploration of new channels.