Peacebird(603877) 长江证券·2025-04-23 09:12Investment Rating - The report maintains a "Buy" rating for the company [7] Core Insights - In the short term, the company is expected to see a recovery in profit growth due to the nearing end of store closures, gradual retail improvement, and enhanced franchise gross margins. In the long term, structural adjustments within the company are anticipated to significantly improve operational quality and profit elasticity. The company is shifting from profit elasticity driven by high retail growth to a more sustainable and robust internal capability-driven profit elasticity. Projected net profits for 2025, 2026, and 2027 are estimated at 360 million, 470 million, and 560 million yuan respectively, with corresponding PE ratios of 21, 16, and 14 [2][11]. Financial Performance Summary - For Q1 2025, the company reported revenue, net profit attributable to the parent, and net profit excluding non-recurring gains and losses of 1.67 billion, 120 million, and 90 million yuan respectively, reflecting year-on-year changes of -7.6%, -22.0%, and -20.7% [5]. - The company experienced a decline in revenue across various brands, with women's clothing, men's clothing, and children's clothing revenues down by 12.8%, 6.7%, and 6.6% respectively. However, gross margins improved across all categories due to strong discount control and a low base effect [11]. - The company closed a net of 23 direct-operated stores and 34 franchise stores in Q1, continuing its strategy to shut down inefficient outlets and consolidate some locations [11]. - The gross margin for Q1 increased by 4.8 percentage points, while the net profit margin decreased by 1.4 percentage points to 7.4% due to negative operating leverage [11]. Operational Quality - The company's inventory for Q1 stood at 1.64 billion yuan, showing a year-on-year increase of 20% and a quarter-on-quarter decrease of 6%. The increase is attributed to weak sales of winter merchandise and reduced clearance of old stock [11]. - The net operating cash flow for Q1 was -300 million yuan, primarily due to increased payments to franchisees and declining revenues [11].