The first third quarter of 2021 was lower than we expected.
The company announced its results for the first three quarters of 2021: revenue of 4.679 billion yuan, down 0.8% from the same period last year; net profit of 158 million yuan, up 25.0% from the same period last year, lower than we expected, mainly due to intensified competition in the industry; deducting 85 million yuan from non-net profit, an increase of 12.4% over the same period last year.
On a quarter-to-quarter basis, Q1/Q2/Q3 revenue is + 9.0% CPM 8.2% CPM 5.0%, net profit is + 80.3% CPM 15.6% MAK 34.7%, and non-net profit is + 110.5% CPM 18.7% MAULI 190.9% respectively.
Development trend
1. Revenue in the first three quarters fell slightly by 0.8% compared with the same period last year. The company's 1-3Q21 revenue fell slightly by 0.8% year-on-year, of which single Q3 fell 5.0% year-on-year, narrowing the decline compared with Q2. From a sub-industry perspective: 1) Department stores: we expect the growth rate of 1-3Q to slow slightly compared with 1H, mainly due to the repeated impact of the epidemic, and the Q3 base was relatively high last year; 2) supermarket industry: due to the government's decision to undertake the distribution task of the epidemic in the community during the epidemic last year, the base is high in the same period, we expect 1-3Q sales to decline slightly; 3) Agricultural products trading market: a slight improvement is expected.
2. Profitability has been repaired. 1-3Q21's gross profit margin increased by 1.8ppt to 31.1%, and the gross profit margin improved from the same period last year; from the expense point of view, the sales expense rate decreased from 0.3ppt to 7.2%, the management expense rate increased from 0.8ppt to 16.3%, and the financial expense rate increased from 0.5ppt to 1.2%, mainly due to the implementation of the new lease standards during the reporting period. Under the combined influence, the company's net interest rate increased by 0.7ppt to 3.4%, non-net interest rate also increased by 0.2ppt to 1.8%, and profitability was repaired.
3. The company actively promotes the strategic transformation of "double main business plus" and continues to pay attention to the effectiveness of transformation and innovation.
1) main business innovation: Department store format, tamping advantage categories, introducing high-end brands and new brands, increasing the proportion of updating and upgrading of high-quality goods; supermarket format, Family Foods try the partnership mechanism, consolidate core commodities, strengthen fresh products category; 2) strengthen coordination: strengthen the coordination of business formats, the integration and development of "agriculture + super" mode, and strengthen the exchange and sharing of resources. Strengthen regional coordination, department store format big with small, old with new, family fortune accelerate fresh standardization; 3) technology empowerment: the company improves the CRM system, WBS system, membership system and other infrastructure, continuous information, digital upgrading, to help create a smart business system, intelligent agricultural approval platform.
Profit forecast and valuation
Due to increased competition in the industry, we slightly lowered the company's earnings forecast of 9% per share in 2021 Universe to 0.25 yuan per share in 2022, and the current share price corresponds to the price-to-earnings ratio of 18 times earnings in 2021 and 2022. Maintain the outperform industry rating, and lower the target price by 10% to 5.4 yuan based on earnings forecasts, corresponding to the price-to-earnings ratio of 23 times earnings for 2021 Greater Greater in 2022, which is 28% upside from the current share price.
Risk
The industry competition intensifies and the transformation risk, the epidemic repeated risk, the real estate regulation and control is tightened.