The Zhitong Finance App learned that First Shanghai released a research report stating that maintaining the “buy” rating of Mingchuang Premium (09896), the adjusted net profit for 24-26 is estimated to be 2.81/3.57/4.34 billion yuan, respectively, so the target price was HK$58.29. As a global leader in comprehensive retail with its own brands, the company has extensive space to expand stores at home and abroad. Looking forward to the future, the company's profitability is expected to continue to increase as the share of overseas sales increases, brand upgrades, and the deepening implementation of the super IP strategy.

Performance situation: 2024Q1-Q3/Q3, the company achieved revenue of 12.281/4.523 billion yuan, +22.8%/+19.3% year-on-year, adjusted net profit of 1.928/0.686 billion yuan, +13.7%/+6.9% year-on-year, and an adjusted net interest rate of 15.7%/15.2%.

First, Shanghai's main views are as follows:

Domestic same stores are under pressure, and the IP strategy is driving a steady increase in customer unit prices:

Domestic Mingchuang Premium achieved revenue of 7.03/2.44 billion yuan in Q1-3/Q3, +14.0%/+5.7% year-on-year. As of September 2024, the number of Mingchuang Premium stores in China was 4,250, with a net increase of 135 stores in Q3. It is expected that the same stores in high-tier cities will perform better than in lower-tier cities, driven by sales of IP strategies. TOPTOYQ1-3/Q3 achieved revenue of 0.7/0.27 billion yuan, +42.5%/+50.4% year-on-year. Q1-3TOPTOY's revenue growth rate was impressive, mainly due to the increase in the number of units in same-store sales and the rapid increase in the average number of stores. As of September 2024, the number of TOPTOY stores reached 234, with a net increase of 86/39 stores in Q1-3/Q3.

Overseas store expansion is steady, and the Q4 peak season is expected to usher in performance release:

Overseas Mingchuang Premium achieved revenue of 4.54/1.81 billion yuan in Q1-3/Q3, +41.5%/+39.8% year-on-year. Among them, Q1-3 direct/agency market revenue achieved revenue of 2.448/2.095 billion yuan respectively, +54%/+46% over the same period last year. As of September 2024, the number of overseas Mingchuang Premium stores reached 2,936, with a net increase of 183 stores in Q3. Overseas same-store sales achieved high unit growth in Q1-3. By region, Q1-3 sales in Latin America/North America/Asia/Europe achieved 10-20% low/medium units/high units/low unit growth, respectively. In Q3, there was a net increase of 14/60/88/16 stores in the region, respectively. It is expected that with the arrival of the Q4 overseas peak season, combined with Harry Potter IP catalysis, overseas sales performance will be further released.

The gross margin reached a record high, and the sales expense ratio increased by 5.1 pct year over year:

In terms of gross margin, Q1-3 achieved a gross profit margin of 44.1%, an increase of 3.7 pct year on year, and the company's gross margin increased 3.1 pct year on year to 44.9% in a single quarter, reaching a new high. The increase in gross margin of Q1-3 was mainly due to 1) the increase in overseas revenue share and overseas direct market revenue share. Q1-3's overseas revenue contribution increased from 32% last year to 37% this year, and the revenue share of the overseas direct sales market increased from 14.9% last year to 19% this year; 2) With the effective implementation of IP strategies, Mingchuang Premium's overseas and TOPTOY gross margins increased by medium to high orders of magnitude. In terms of expense ratios, in Q1-3/Q3, the company's sales expenses ratio was 20.5%/22.0%, +4.9/+5.1pct, mainly due to the accelerated expansion of stores in overseas direct sales markets, leading to increased expenses related to rent, depreciation, amortization, wages, etc.; the company's management expenses ratio was 5.3%/5.2%, +0.4/+0.7pct, mainly due to the increase in personnel related expenses related to business growth.