1-3Q21 performance is basically in line with our expectations
The company announced 1-3Q21 results: realized operating income of 6.14 billion yuan (+ 2.6%), return net profit of 650 million yuan (+ 44.4%), deducted non-return net profit of 530 million yuan (+ 30.9%), basically in line with our expectations.
From a quarterly point of view, Q1/Q2/Q3 revenue is + 19.1%, respectively, 0.6%, 12.4%, + 431.9%, 7.2%, 6.1%, and + 707.1%, 18.9%, 29.6%, respectively. We believe that it is mainly due to repeated epidemics and intensified competition.
Trend of development
1. 1-3Q21 revenue increased 2.6% compared with the same period last year, and Q3 revenue alone was under pressure. Looking at the revenue of 1-3Q21 by region and format, Dalian department store / supermarket / electrical appliance format is + 82.61% compared with the same period last year, respectively. Daqing department store / supermarket / electrical appliance format is + 233.30%, + 233.30% picket 26.08%, and Mudanjiang department store / supermarket format is + 707.79% and 29.45% respectively.
Generally speaking, due to the optional attributes, the impact base of the epidemic in 2020 is low and the rebound rate is high in 2021, while the base of the supermarket format is relatively high during the epidemic last year and has declined this year. From the perspective of Q3 alone, the company's overall revenue decreased month-on-month, which we think is mainly affected by the epidemic situation in some areas.
2. Profitability is repaired step by step. The company's 1-3Q21 gross profit margin is reduced by 9.2ppt to 40.6%, mainly due to the change in accounting standards to adjust the depreciation charges of self-owned houses directly related to business buildings from management expenses to operating costs. From the expense side, the sales / management + R & D / financial expense rates are year-on-year-1.1ppt/-12.7ppt/+2.1ppt to 12.5%, 9.9% and 2.3%, respectively. The sharp decline in the management + R & D expense rate is mainly due to the above accounting adjustment, and the increase in the financial expense rate is mainly due to the increase in the interest expense of recognized lease liabilities of leased properties under the new lease standards. Under the combined influence, the net interest rate of 1-3Q21 is increased by 3.2ppt to 10.6%, and the non-net interest rate is also increased by 1.9ppt to 8.7%. The profitability is gradually repaired, but there is still room for repair compared with the profit volume of 1-3Q19.
3. Continue to pay attention to the effectiveness of the company's business adjustment. The company continues to adjust its operation in many dimensions of channel, management and differentiation: 1) multi-channel coordination, actively promoting contactless distribution and other services offline in the face of epidemic situation, and using the company's own platform to carry out live broadcast online, continuous offline drainage; 2) reduce costs and increase profits, deepen the structural reform of stores, close loss-making stores in time (Q3 closes Shuangyashan Xinmatt), and optimize the allocation of resources. Increase the proportion of direct merchandise and high gross margin commodities, and increase profits; 3) differentiated operation, relying on the group's own resources advantage to gradually increase the introduction and sales of global geographical iconic scarce goods, in line with the trend of consumption upgrading.
Profit forecast and valuation
The deduction of non-net profit is basically in line with our expectations, but due to the high amount of income from non-recurring items such as Q3 government subsidies and transactional financial assets, we have raised our earnings forecast per share by 15% to 2.38 yuan in 2021, and based on the intensification of competition in the industry, we have lowered our earnings forecast per share by 8% to 2.07 yuan in 2022, and the current share price corresponds to the price-to-earnings ratio of 89 times earnings in 2021. Maintain the outperform industry rating, and lower the target price by 8% to 22 yuan based on earnings forecasts, corresponding to 2021 Universe 11 times Pmax E in 2022, which is 19% upside compared to the current stock price.
Risk
Consumption continues to be weak; repeated risk of epidemic situation; intensified competition in the industry; risk of legal action.