Event
The company released its quarterly report in 2022, with revenue of 2.255 billion yuan (- 39.78%), net profit of 256 million yuan (+ 419.60%), net profit of 119 million yuan (+ 138.99%), revenue of 461 million yuan (- 57.08%), net profit of 37 million yuan (+ 251.96%) and net profit of 37 million yuan (+ 266.02%) in the first three quarters of 2022.
Focus on Internet marketing business to improve profitability
The decline in 2022Q3 revenue was mainly due to the spin-off of the retail business, which accounted for a large share of revenue, in 2022.4.19 (61.76% in 2021). 2022Q3 gross profit margin is 27.09% (+ 2.17pct), sales expense rate is 12.7% (- 7.7pct), management expense rate is 3.4% (- 2.1pct), and net profit rate is 7.96% (+ 10.23pct), mainly because Internet marketing business has higher gross profit margin, less affected by the epidemic and higher operating efficiency than traditional retail business.
Head liquor e-commerce service provider to create C2B customized products
The company provides full-link and diversified e-commerce services for TOP brands in wine, water, daily chemical, mother and infant, and household industries, and has established deep partnerships with well-known e-commerce platforms such as JD.com, Tmall, Douyin, Vipshop Holdings Limited, Pinduoduo, etc., and has been in the head array of integrated liquor brand operators on e-commerce platform for many years. The company is rooted in cross-category, multi-channel, multi-mode service capabilities, based on deep consumer insight, cooperate with brands to develop C2B customized products, and gradually form the second growth curve of the company's development in the future.
Investment suggestion
In the short term, the company has spun off the retail business with serious losses affected by the epidemic, focusing on the main body of profit contribution-Internet marketing business, and its performance is expected to achieve greater flexibility. In the long run, the company's Internet marketing business has the advantages of multi-channel operation such as Tmall, JD.com and Pinduoduo. While ploughing liquor operation, it is expected to achieve stable growth by expanding new growth categories and developing its own brand. We estimate that the company's EPS in 2022-2024 will be 0.43,0.29,0.34 yuan per share, respectively, and the corresponding share price PE will be 13,19,16 times respectively, maintaining a "buy" rating.
Risk hint
Category expansion is not as expected; industry competition intensifies.