Event
The company released its semi-annual report for 2022, with revenue of 1.694 billion yuan, a decrease of 23.49% over the same period last year, and a net profit of 141 million yuan, a decrease of 55.44% over the same period last year, with basic earnings per share of 0.0816 yuan.
The epidemic continues to affect and the operation is under pressure.
The revenue of 2022H1's department store retail business reached 1.218 billion yuan, down 16.66 percent from the same period last year, while revenue from hotels, real estate and other businesses reached 145 million yuan, down 62.79 percent from the same period last year. The main reasons for the decline in income are: (1) the repeated epidemic situation, the disappearance of offline consumption scenes, the reduction of passenger flow, the pressure on the retail business of department stores, and the demolition and reconstruction of the main store Yanshikou Maoye Tiandi North District; (2) the company's Chengdu Maoye Haoyuan project was basically sold out in 2021, and sales decreased compared with the same period last year.
Store upgrading, dragging down short-term profitability
2022H1 gross profit margin 61.56%, year-on-year increase of 0.28pct; net profit rate of 8.40%, year-on-year reduction of 6.37pct, period expense rate of 48.42% (+ 10.88pct), of which the sales expense rate was 29.83% (+ 7.46pct), mainly due to the company's "small steps" to adjust and upgrade stores in various regions, including an increase in depreciation charges.
Active layout in the bottom period to build up strength for future development
The company makes use of the cold period of offline sales caused by the epidemic, active layout, the improvement of the epidemic is expected to release performance flexibility: (1) steadily promote the construction of key stores: speed up the upgrading and construction of key projects To promote the reconstruction of the north district of Maoye, Yanshikou, Chengdu, the planning of the land belonging to Chengdu Renhe Investment Co., Ltd. (that is, the former Jincheng Art Palace project), and the construction, sales and investment promotion of Chengdu Shuangliu Maoye Times Square project. (2) persist in adjustment and upgrading, strengthen commodity ability: continuously optimize brand and category, internal adjustment and hardware upgrade, and at the same time strengthen core competitiveness by creating efficient supply chain, opening up self-management, and adjusting product portfolio layout. (3) increase online layout, operation and sales efforts: actively expand community marketing and social marketing through online sales platforms such as APP, Mini Program and LVB, so as to enhance members' omni-channel consumption experience, and at the same time achieve fine operation and guide reverse investment promotion through data analysis to more effectively meet customer needs.
Investment suggestion
In the short term, under the background of the continuous return of high-end consumption, high-end department store brands such as "Renhe Spring" and "Victoria" are expected to continue to enjoy dividends; in the medium to long term, under the background of younger consumption and consumption upgrading, the company is expected to continue to improve ping efficiency and promote the sustained growth of high-end, mid-and high-end department stores by means of restructuring and upgrading and the transformation of shopping centers. We estimate that the company's EPS in 2022-2024 will be 0.20,0.26,0.31 yuan per share respectively, and the corresponding share price PE will be 16,13,11 times respectively, maintaining a "buy" rating.
Risk hint
The epidemic situation in some areas is repeated; the upgrading of consumption is not as expected; the transformation is not as expected.