2022 results are in line with previous forecasts
The company announced its 2022 results: achieved revenue of 12.197 billion yuan, down 1.1% from the previous year, net loss of 320 million yuan, loss of 102 million yuan for the same period last year, net loss of 329 million yuan after deducting non-net loss, and 104 million yuan loss for the same period last year, in line with previous forecasts. On a quarterly basis, the company's 1Q/2Q/3Q/4Q22 revenue fell 1.2%/1.8%/1.1%/0.2%, respectively. The net profit returned to the mother was 0.02/-0.42/-0.76/-204 million yuan respectively. After deducting non-net loss, it was 0.06/0.48/0.76/200 million yuan respectively, and the loss margin continued to increase month-on-month.
Development trends
1. Revenue in 2022 fell 1.1% year on year due to multiple factors. The epidemic has repeatedly caused temporary store closures to exceed the company's expectations. Coupled with the reduction in passenger traffic due to new business formats and e-commerce channel diversion, the company's revenue fell 1.1% in 2022. By business type: 1) Supermarket business: achieved revenue of 11.46 billion yuan, a decrease of 3.5%. In terms of store efficiency, the comparable revenue of hypermarkets and integrated supermarkets, Hubei/hypermarkets and integrated supermarkets Chongqing/community supermarket/convenience store stores fell 3.3%/7.8%/3.4%/3.9%, respectively; 2) Department store business: achieved revenue of 229 million yuan, a decrease of 19.6%, and department stores increased 3.9% compared to revenue. At the end of 2022, the total number of company outlets increased by 144 to 1,683. Among them, there were 197/686/774/9/17 warehouses/community supermarkets/convenience stores/department store/electronics specialty stores, respectively -1/+4/+141/+0/+0, respectively; 3) Other businesses: mainly logistics distribution business and group purchase business, revenue increased 36.2%.
2. The gross margin of the main business declined, and profitability was damaged in '22. The company's gross margin in 2022 was 23.9%, down 1.1 ppt. Among them, the supermarket/department store business fell 0.7/0.1ppt to 23.4%/74.3%. In terms of cost ratio, the sales expense ratio increased 0.6ppt to 20.2%, sales expenses were relatively rigid, the management expenses rate increased 0.2ppt to 4.2%, and the R&D expenses rate increased 0.1ppt to 0.3%. Mainly for the new R&D projects of Digital Zhiyun, the financial expense ratio was 1.1%, the same as the previous year. Under the combined influence, net interest rate to the mother fell 2.4 ppt to -2.6%; government subsidies decreased year over year, and net interest rate after deducting non-net interest fell 1.9 ppt to -2.7%.
3. Follow the company's new business and store development progress. 1) In terms of new business, the company actively promoted omni-channel business growth, expanded food supply chain services and group buying business, and had excellent performance in 2022:
Online business sales reached 1,724 billion yuan, an increase of 31.5%, while food delivery business/physical group purchase sales increased 25.8%/12.7%. 2) In terms of stores, the company continues to promote network innovation, adding 127 innovative stores in 2022; in 2023, the company plans to add 300 commercial outlets, including 100 warehouses and 200 convenience stores. The convenience store business will accelerate the expansion of the Hunan market and take the opportunity to launch the Henan market network plan.
Profit forecasting and valuation
The 2023 profit forecast was maintained at 23 million yuan, and the 2024 profit forecast of 031 million yuan was introduced. The current stock price corresponds to 2023/24 0.27/0.27 times P/S. Maintaining a neutral rating and target price of 4.4 yuan, corresponding to 0.25/0.24 times P/S in 2023/2024, there is room for 11% decline from the current stock price.
risks
Market competition intensified; passenger flow recovery fell short of expectations.