Company trends
The current situation of the company
Recently, we have organized Gao Xin retail offline research, in-depth exchange of business situation and development strategy with management. Since the beginning of this year, with the fading of the impact of the epidemic, the company's offline passenger flow has gradually improved, the online business has continued to grow rapidly, and the advantages of all-channel operation have been continuously consolidated. The company actively promotes offline store restructuring, home business efficiency, fresh supply chain construction and new business type expansion, leading the industry in transformation and upgrading, we believe that it is expected to drive the company's profitability to repair steadily and continue to expand market share.
Comment
1. Since the beginning of this year, the warming trend of the same store is obvious, and the online business has maintained rapid growth. During the period of New Year's Day, most cities were still in the over-peak period, and the offline passenger flow and the same shop were still under pressure. With the rapid fading of the impact of the epidemic, the performance of the same store has improved significantly during the Spring Festival, and we expect to return to low unit growth. According to the disclosure of Da Runfa, the unit price of passengers from the first to the fifth year of junior high school increased by 6.1%. Although the passenger flow was still in the process of repairing compared with the same period last year, it also achieved a 30% increase in the average passenger flow in offline stores. In addition, the proportion of the company's online business continues to increase, and the number of orders for excellent APP from New Year's Eve to the sixth day of junior high school has also increased by 40 per cent. We believe that the warming of offline passenger flow and the growth of online business are expected to continue to improve the performance of the company after the epidemic.
2. Offline store restructuring + online business efficiency, profitability is expected to be gradually repaired. The company positions Dayun Fat as an offline experience center plus an online compliance center to support omni-channel operation. 1) Store restructuring attracts offline backflow: clear customer group positioning, streamlining SKU, optimizing store functional area and moving line design, enhancing consumer experience. The number of customers in the first half of the renovation of benchmarking stores has increased by 20%. We expect that with the promotion of the model, offline backflow is expected to drive stores to repair profits. 2) improve the efficiency of online business: at present, about 80% of the stores in Darunfa have installed suspension chains, and the warehouse transformation is committed to realizing the quick pick-up of multi-platform and supporting the increase of online order carrying capacity of stores. 3) fresh warehouse construction: the company's FY23 accelerates the construction of fresh processing warehouse, which has achieved the coverage of most stores, which is conducive to improving gross profit through supply chain standardization. With the release of the above results, we expect that the company's FY23 is expected to reverse losses after excluding store impairment, followed by a gradual improvement in profit margins.
3. Actively expand diversified business formats, and the growth prospect of member stores is promising. 1) CSL is the main force of the follow-up exhibition store:
The CSL shares the commodity pool, supply chain and operation system with the hypermarket. At present, the store model has become popular, and we expect to speed up the pace of store expansion. 2) the small super model continues to polish: the opening area is gradually standardized and currently focuses on Nantong. Through fresh storage, management and commodity standardization to improve profitability, the model is expected to expand to higher-line cities. 3) the layout of member stores has potential: build M member store brand, expand stores in the way of transforming Dayun Fat stores, and enjoy the customer base of Dayun Fat and the advantage of more suitable store area. The first M member store is scheduled to open in Yangzhou on April 28th. At present, the pace of member recruitment is ahead of the industry. We expect that the transformation of member stores is expected to improve the efficiency of individual stores, and the growth prospect of new business is worth looking forward to.
Profit forecast and valuation
Keep the profit forecast unchanged. Considering that the company is in the profit turnaround period, the valuation of Phammer E fluctuates greatly, so the valuation of Phammer S is adopted. The current share price corresponds to the 2023 price of 0.3 pound and 0.3 times the price of fiscal year 24. Maintain an industry rating that outperforms.
Taking into account the trend that the recovery of passenger flow after the epidemic and the transformation and upgrading of the company have contributed to the continued improvement of profits, the target price has been raised by 54% to HK $3.7, corresponding to 0.4 max in fiscal year 2023, which is 0.3 times the upside space of Pamp Score 10%.
Risk
The epidemic situation is repeated; the competition in the industry intensifies; the online home growth falls short of expectations; and the new business expansion falls short of expectations.