2021 results are in line with previous forecasts
The company announced 2021 results: realized income of 7.932 billion yuan, down 2.3% from the same period last year, net profit of 702 million yuan, an increase of 40.6% over the same period last year, deducting 560 million yuan of non-net profit, an increase of 12.1% over the same period last year. The performance is in line with the previous forecast. Non-recurrent income is mainly non-current assets disposal profit and loss and financial investment income. From a quarterly point of view, 1Q/2Q/3Q/4Q21 revenue is + 19.1% Universe 12.4% Universe 16.1%, deducting non-net profit + 707.1% Mab 18.9% Mab 29.6% Melco 70.4%. We believe that repeated epidemics in the second half of the year have put pressure on the company's 2H21 performance.
At the same time, the company plans to pay a cash dividend of 20 yuan for every 10 shares, with a cash dividend ratio of 109.54% (including a dividend rate of 28.48% for 2021) and a dividend yield of 9.9% (based on the closing price on April 8, 2022), exceeding our expectations.
Trend of development
1. Intensified competition and repeated epidemics have led to a 2.3% drop in revenue compared with the same period last year. In terms of business formats, the revenue of department stores / supermarkets / home appliance chains in 2021 was-1.3%, respectively, compared with the same period last year. The decline in the format of supermarkets was mainly due to the high base during the 2020 epidemic and increased competition in the industry during the reporting period. From a regional point of view, the revenues of Dalian, Daqing and Mudanjiang, which account for relatively high revenue, are-6.3%, 0.9%, 12.4%, respectively, year on year. During the reporting period, the company optimized the layout and resource allocation, closed loss-making stores, and the total number of stores opened at the end of the reporting period decreased by 6 to 122 compared with the same period last year, which also had a certain impact on revenue scale.
2. The optimization of gross profit margin leads to the improvement of profitability in 2021. The company's gross profit margin increased to 39.7% in 2021, mainly because the company increased the proportion of direct merchandise, increased the proportion of goods with higher gross margin, and the proportion of revenue of supermarkets with lower gross profit margin declined compared with the same period last year. The rate of sales expenses decreased by 0.2ppt to 12.2%, the rate of management expenses increased by 1.8ppt to 10.1%, and the rate of financial expenses increased by 2.7ppt to 2.3%. Mainly due to the implementation of the new lease standards, the amortization of unrecognized financing expenses for lease liabilities is about 240 million yuan. The homing net interest rate also increased by 2.7ppt to 8.9%, and the non-net interest rate also increased by 0.9ppt to 7.1%. The profitability has been improved.
3. Pay attention to the progress of various reform measures. 1) the layout of high-speed cities, the company has set up South-to-North goods transfer Trading Co., Ltd. in Beijing, and plans to promote the construction of operators in Shanghai and other first-tier cities in the future; 2) the expansion of new categories, in order to avoid competition in the same industry, it is proposed to set up Shanghai Wholesale Corporation to carry out international scarce commodity wholesale business and break the traditional business dilemma. 3) store structure adjustment, the company actively adjusts the category structure to meet consumer demand, plans to expand the proportion of food items to 60%, and clothing items to about 40%, which is expected to further improve the efficiency of stores.
Profit forecast and valuation
Basically maintain the 2022 EPS forecast 2.07 yuan, at the same time introduce the 2023 EPS forecast 2.19 yuan, the current stock price corresponds to the 2022 10-pound 2023 10-pound E. Maintain an outperform industry rating with a target price of 22 yuan, corresponding to 2022, 2023, 11, 10, and 9% upside space.
Risk
Consumption continues to be weak; repeated risks of the epidemic; industry competition intensifies.