19 Mar 2024

The company reported a 14.8% YoY increase in topline to Rmb3,544m in FY23 on the back of normalization of store operations post pandemic. Particularly, 2H23 reported a stronger growth at 21.6% YoY compared to 1H23. GPM was up by 2.2ppt YoY to 48.2% mainly due to i) the reversal of inventory provision was Rmb26.7m higher than that in FY22; and ii) no sales rebated offered to distributors last year; and iii) significant increase in sales of the smart casual collection which carried a higher GPM. S&D ratio was up from 25.7% in FY22 to 27.0% in FY23 as a result of a 30% YoY increase in advertising and renovation expenses to Rmb521m, as a result of i) the introduction of a new brand logo; ii) increased promotion of the minimalist menswear image; and iii) postponement of store renovation from FY22 to FY23. Admin cost ratio was slightly up by 0.8ppt YoY to 5.0% on the back of AR impairment was Rmb6.9m less than that of FY22. As a result, FY23 NP increased by 18.4% YoY to Rmb530m with NPM increased by 0.5ppt YoY to 15.0%.

CROSBY Research – China Lilang (1234 HK): Expects at least 15% retail sales growth in FY24