Short-term inventory removal is not over yet. It is expected that Q4 e-commerce peak season revenue will increase significantly, maintaining revenue of purchasing rating companies of 2,775 billion yuan (+0.08%) in the first three quarters of 2021, and net profit of 403 million yuan (-44.15%). The decline is clearly mainly due to the fact that Ali Channel is still in the inventory removal stage, fixed cost expenses, large investment in cross-border and food businesses, and flood donations. Looking at Q3 alone, the decline in revenue and net profit returned to the mother showed a narrower trend compared to Q2. With the arrival of the Q4 e-commerce peak season, it is expected that revenue will improve after the consumption of inventory trademarks is over.
We lowered our profit forecast. We forecast net profit of 7.8/92/1.15 billion yuan for 2021-2023 (previously: 8.0/131/1.84 billion yuan), the corresponding EPS is 0.3/0.4/0.5 yuan, and the current stock price corresponding to PE is 22.3/18.7/15.0 times. We are still optimistic about the company's five-year plan to expand the breadth of brands/category/channels around “brand+consumer goods” for a long time. At the same time, we expect the cross-border business launched in October to become another growth point. Continue to maintain the “buy” rating.
Revenue side: The headquarters's business revenue was affected by the removal of Alibaba channel label inventory. Time Connect's business was stable. The headquarters revenue for the first three quarters of 2021 was 505 million yuan (-37.62%), mainly due to the company actively adjusting Alibaba channel revenue targets to reduce the trademark inventory pressure of Alibaba Channel customers. Pinduo's multi-channel revenue exceeded 150 million yuan (+55%), and live streaming channel revenue exceeded 46 million yuan; Time Connect's revenue was 2,270 million yuan (+15.63%). The performance was relatively steady, mainly due to new and old customers in the advertising sector going hand in hand, in the MCN sector Diversified development.
GMV: Traditional search channels declined slightly, Pinduoduo's multi-channel channels maintained moderate development, and content channels continued to improve. The omni-channel GMV for the first three quarters of 2021 was 28.090 billion yuan (+22.92%). Looking at individual channels, the growth rates of Ali/Pinduoduo/Jingdong/Vipshop GMV were -5.35%/+95.87%/+24.98%/+0.84% respectively, accounting for 46%/32%/14%/4%, respectively. Douyin and Kuaishou channels achieved GMV of 991 million yuan, accounting for 4% of the total Q3 Yuan, the July-September Antarctic brand ranked 2/4/1 respectively in the Douyin brand list (ranked by sales volume). The continued improvement of the new platform proved that the company's demand for good goods is not going away.
Gross margin declined somewhat due to revenue, and operating capacity remained good (1) Profitability: The company's gross margin in the first three quarters of 2021 was 21.87% (-9.62pct), mainly due to a decline in revenue. The 0.3 pct increase in sales expenses ratio was mainly due to the company increasing its investment in promoting new platforms and food businesses. The net interest rate was 14.53% (-11.51pct). (2) Operating capacity: As of 2021/Q3, the company's net operating cash flow was -287 million yuan, mainly due to a decrease in receivables and an increase in the scale of factoring business loans. The number of accounts receivable turnover days was 128 days, an increase of 58 days over the previous year. Compared with the same period before the pandemic, the company's net operating cash flow was -287 million yuan.
Risk warning: Changes in the platform competition pattern, cross-border business construction falling short of expectations, category expansion falling short of expectations.