Haitong: Maintains an "outperform" rating on JNBY (03306) with a fair value of HK$16.75-18.62.

Haitong released a research report stating that it is expected that JNBY (03306) will achieve a net profit attributable to shareholders of 8.88 billion, 9.55 billion, and 10.28 billion yuan in the fiscal years 2025-2027, corresponding to earnings per share of 1.71 yuan, 1.84 yuan, and 1.98 yuan per share. The reasonable price range is 16.75-18.62 Hong Kong dollars per share, maintaining an "outperform" rating. Key points from Haitong are as follows: High-quality growth was achieved in FY24, with a continuous improvement in profitability level. In FY24, revenue increased by 17.3% to 5.24 billion yuan, with online/offline revenue increasing by 17.1%/18.4%, and comparable store sales increasing by 10.7% (H1: 23.9%). Net profit attributable to shareholders increased by 36.7% to 850 million yuan, with a net profit margin of 16.2%, an increase of 2.3 percentage points. In FY24H2, revenue increased by 7.5% to 2.26 billion yuan (H1: +26.1%), gross margin increased by 1.2 percentage points to 67.3%, net profit attributable to shareholders increased by 10.2% to 270 million yuan, and net profit margin increased by 0.3 percentage points to 12.2%. Improvements in discount management and inventory structure optimization have driven the profitability of each brand. In FY24, revenue for mature/growth/emerging brands increased by 17.1%/17%/28.7% (H1: 24%/29.7%/12.9%, H2: 8.9%/3.9%/44.5%), with the slowdown in H2 mainly due to the high growth base. Gross margins in FY24H2 were 69.9%/65.4%/44.8% (year-on-year increases of 1.7/1/0.8 percentage points), operating profit margins were 37.8%/24.9%/-0.3% (year-on-year increases of 5.3/1.4/7.4 percentage points), with improvements in profitability mainly due to good retail discount management and inventory structure optimization. The main reason for the increase in offline revenue is same-store growth, with new store contributions being relatively small. In FY24, the company opened a net 34 stores (H1: 46 stores, H2: -12 stores). Of these, mature/growth/emerging brand stores opened a net 3/24/6 stores (H1: 14/24/7 stores, H2: -11/0/-1 stores). By channel, the number of self-operated stores decreased, while franchise stores continued to open, with a net decrease of -50/86/0/-2 stores for China self-operated/China franchise/overseas self-operated/overseas franchise stores (H1: -15/+62/0/-1 stores, H2: -35/+24/0/-1 stores). Offline self-operated/offline franchise/online revenue increased by 16.4%/17.7%/18.4% year-on-year (H1: 36.7%/18.2%/24.2%, H2: -1.3%/17%/12.5%), with the main reason for the increase in offline revenue coming from same-store growth, while new store growth contributed little. Core member development and maintenance is good. In FY24, there were 556,000 active member accounts, an increase of 9.4% year-on-year. The number of members who spent over 5,000 yuan in a year was 319,000, an increase of 23.2% year-on-year, with a 3% year-on-year increase in average consumption. Their retail consumption amounted to 4.49 billion yuan, an increase of 26.8% year-on-year, contributing approximately 60% of the total revenue from offline sales. The dividend yield for FY24 is 12.1%, and it is expected to reach 9.8% for FY25. The company plans to pay a year-end dividend of 0.86 Hong Kong dollars per share for FY24, with a full-year payout ratio of 97% (including special dividends), resulting in a dividend yield of 12.1%. Assuming that the company maintains a payout ratio of at least 75%, the bank estimates that the dividend yield for FY25 could reach 9.8%.