Key points of investment
The company released its 2022 semi-annual report. 22H1 achieved revenue of 909 million yuan, a decrease of 7.32% over the previous year; Guimu's net profit was 100 million yuan, an increase of 41.82% over the previous year. 22Q2 achieved revenue of 401 million yuan, a year-on-year decrease of 14.32%; Guimu's net profit was 69 million yuan, an increase of 73.16% over the previous year. The decline in 22H1 revenue was mainly due to the multiple outbreak of the epidemic across the country and the decline in sales revenue of commercial real estate projects. The increase in profit was mainly due to the completion of a 100% equity transfer transaction in Jiaxing Dain, which is the target of REITs.
The commercial retail business has been impacted by the outbreak of the epidemic in many locations, and refined operations have stabilized performance. The 22H1 commercial retail sector achieved operating income of 820 million yuan, a year-on-year decrease of 4.61% and a decrease of 4.65% from the previous period; 22H1's net profit to the mother of this sector decreased by 14 million yuan compared to the previous period. The decline in revenue and profit is mainly due to the overall impact of the outbreak of the national epidemic on the commercial retail industry. However, the company has effectively reduced the impact of the epidemic through innovative marketing strategies (issuing consumer vouchers, expanding publicity channels), strengthening core category upgrades (optimization and upgrading of Dongbai Center and Lanzhou Center), in-depth operation of member assets, and speeding up digital construction (independent development of intelligent service centers), etc., and the sales scale remains number one in the Fuzhou department store market.
The scale of the warehousing and logistics business is expanding steadily, and the continued release of assets under construction will contribute to rent income and management income in the future. The company's warehousing and logistics business generated revenue of 47 million yuan in 22H1, an increase of 15.82% over the previous year and an increase of 17.50% over the previous year; 22H1 completed the 100% equity transfer of Jiaxing Dain, the target of REITs, confirming investment income of 161 million yuan, which greatly increased the company's net profit to the mother. As of 202H1, the construction area of logistics projects under the company's operation and construction was about 1.84 million square meters, the overall rental rate of stable operation projects exceeded 83%, and 2022H1 completed 1 new logistics project, with a construction area of about 50,000 square meters. Currently, the construction area of the completed logistics project owned by the company is about 400,000 square meters, the construction area of the completed logistics project that the transfer company is responsible for operation and management is about 590,000 square meters, and the construction area of the logistics project under construction is about 870,000 square meters. According to construction progress estimates, warehousing assets under construction are expected to continue to release incremental increases in 2022-2024, contributing rent income and asset management income to the company.
The warehousing and logistics sector completed project cooperation with funds and REITs, and the “investment-build-investment-return-management” asset-light business model became more mature. In 2018, the company reached a strategic cooperation with Blackstone Group. As of 2021, the company had sold 80% of its shares in four warehousing and logistics projects totaling 500,000 square meters (Foshan Ruiyou, Tianjin Construction, Chengdu Xinjia Logistics Co., Ltd., and Foshan Ruixin) to Blackstone Group. In May 2022, the company once again implemented the “investment-build-recruitment-withdrawal-manage” asset-light business model, transferring three warehousing and logistics projects to REITs Hong Kong Leaders' Fund at a price of 947 million yuan. In the future, according to the actual development of the warehousing and logistics industry and its own situation, the company will also rationally choose REITs methods to exit the project, broaden the company's financing channels, and realize the continuous operation of the company's warehousing and logistics sector.
Investment suggestions: The company's “commercial retail+warehousing logistics” two-wheel drive, retail business performance remains relatively stable, and the leading position in the region is stable. At the same time, digital marketing and data operation are being actively implemented to promote deep online and offline integration; the scale of logistics and warehousing business has steadily expanded, the “investment-build-investment-return-management” asset-light business model has become more mature, and project quality and management capabilities have been recognized by listed REITs. It is expected that the company's warehousing and logistics sector will continue to operate continuously in the future through cooperation with funds and REITs projects. We adjusted our profit forecast. In 2022-2024, we expect the company to achieve net profit of 309, 2.46 and 305 million yuan, EPS of 0.35, 0.28 and 0.35 yuan respectively, and the closing price corresponding to PE on August 26 was 11.5, 14.4, and 11.6 times, respectively, maintaining the “prudent increase” rating.
Risk warning: demand in the retail market has declined sharply, demand in the logistics market has dropped sharply, logistics land supply has been drastically tightened, property values have declined, etc.