Performance review
2022 results are slightly below our expectations
The company announced its 2022 results: achieved revenue of 7.277 billion yuan, with a comparable net profit of 5.49 million yuan, a comparable net profit of 549 million yuan, deducting non-net profit of 384 million yuan, and a comparable level of 31.4%, slightly lower than our expectations, mainly due to the impact of the second impact of the 4Q22 epidemic. At the same time, the company plans to distribute a cash dividend of 5 yuan for every 10 shares, with a dividend ratio of about 25.9%.
On a quarterly basis, in a comparable perspective, the company's 1Q/2Q/3Q/4Q22 revenue fell 10.5%/15.4%/8.8%/18.2%, respectively, and the net profit of the mother fell 19.2% /7.8% /63.4%/32.4%, respectively; after deducting non-net profit, the year-on-year difference was -13.9%/-38.5%/-69.1%/+40.1%. The same increase in 4Q was clearly due to the lower base of the previous year.
Development trends
1. Revenue in 2022 fell by a comparable amount of 13.0% due to factors such as the disturbance of the epidemic. 1) By business format, department store/supermarket/home appliance chain revenue fell 22.9%/8.0%/10.1% respectively in 2022. We believe that the company's stores were intermittently closed several times, mainly due to repeated epidemics. The damage to passenger flow was obvious, and industry competition intensified; 2) By region, revenue from the major operating regions of Dalian, Daqing, and Mudanjiang fell 10.0% /16.7% /12.3% respectively; 3) Looking at each channel, the company net closed 2 offline stores in 2022, with 120 online terminal store channels; Good growth, GMV /Sales increased by 20.3%/6.0% to $402/220 million, respectively, and the number of resident merchants increased by 56 to 119 over the end of the previous year.
2. The gross margins of the main businesses have all declined, and profitability has been under pressure in '22. The company's gross margin in 2022 was 38.0%, down 2.1ppt. Among them, the department store/supermarket/home appliance business fell 0.8/0.8/2.3ppt to 47.2%/6.5%/18.3%, respectively. In terms of expense ratio, the company's sales expense ratio increased 0.5ppt to 12.7%, management expense ratio increased 0.9ppt to 11.0%, and financial expense ratio decreased by 0.2ppt to 2.1%. Under the combined influence, the net interest rate to the mother fell 1.5ppt to 7.5%, and after deducting the non-net interest rate, the same fell 1.4ppt to 5.3%.
3. Focus on improving operating efficiency and speeding up store expansion in 2023. 1) In terms of business goals, the company sets the target for the full year of 2023 based on 2019 performance, and will focus on developing customer orders, continuously exploring emerging businesses, and improving annual performance through a two-pronged approach of incremental inventory; 2) In terms of store expansion plans, in 2023, the company will expand central integration by opening additional flagship stores for home appliances, use the opening of new community stores as exclusive supply for powerful merchants, and plans to prioritize the opening of new flagship stores, regular stores, and franchise stores in Liaoning, Heilongjiang, Henan and other regions; in addition, the company also plans to build its own or introduce new flagship stores at an appropriate low time Cost-effective assets, output management experience to achieve low cost Expand stores with assets and high efficiency.
Profit forecasting and valuation
The 2023 profit forecast was maintained at 640 million yuan, and the 2024 profit forecast was introduced at 680 million yuan. The current stock price corresponds to 9/8 times P/E of 2023/24, maintaining outperforming the industry rating and target price of 22 yuan, corresponding to 10/9 times P/E in 2023/24, which is 15% upward from the current price.
risks
Competition in the industry intensified; passenger flow recovery fell short of expectations.