Main points of investment
Matters: Wenfeng shares released its 2014 annual report on February 28th, with an annual operating income of 7.795 billion yuan, an increase of 8.59% over the same period last year, and a net profit of 444 million yuan (56 million compensation for breach of contract received by the Dafeng municipal government), an increase of 15.35% over the same period last year. The net profit after deducting non-return was 369 million yuan, an increase of 1.38% over the same period last year, which is basically in line with expectations.
Dividend plan announced: high transfer to 10 shares to 15 shares 3.6 yuan, the company's cash flow is sufficient.
Peace viewpoint:
The retail income of the main business increased slightly, and the confirmed contribution of real estate was obvious: the total operating income of the company in the past 14 years was 7.795 billion yuan, an increase of 8.59% over the same period last year. Among them, department stores rely on the regional advantages and extension expansion of third-and fourth-tier cities to achieve a year-on-year growth rate of 6.42%, while supermarkets (low CPI) and electrical appliances (e-commerce impact and closure of six stores) both showed a slight decline of-4.43% and 6.75%. Wenjing Real Estate and Rugao Yangtze River real estate settlement contributed 504 million yuan in income, becoming the main source of income growth. In terms of gross profit margin, department stores and supermarkets increased by 0.12 percentage points and 0.06 basis points respectively, and home appliances increased by 1.19 basis points, mainly because the company relied on the advantage of local brands to increase the rebate rate of newly signed contracts by 0.5-2 percentage points, alleviating the negative impact of the decline in revenue from physical home appliances on performance.
The advantages of property and labor are highlighted, and the performance of 56 million compensation has greatly increased: the company's sales + management expenses rate is 9.74%, with a certain competitive advantage (outstanding ability to obtain property and low personnel costs), and the industry average is about 14%. In the past 14 years, Dafeng Wenfeng World, a wholly owned subsidiary of the company, received 56 million yuan in compensation for the loss of land not delivered in accordance with the contract, which greatly improved the company's performance and thickened EPS0.08 yuan.
It is estimated that 15-17 EPS=0.64/0.66/0.74 yuan, "neutral" rating: due to the low prosperity of the industry, we think that 15 years of pressure on the main business of the company is greater, coupled with the increased investment in the "fall in love with Wenfeng" e-commerce platform, taking into account the Rugao City Square and Wenfeng City Square real estate confirmation and other factors, it is estimated that the 15-17 EPS is 0.64 EPS 0.66 Plus 0.74 yuan respectively. Maintain a "neutral" rating for PE=19.5X/18.7X/16.8X.
Risk tips: real estate sales do not meet expectations; labor costs rise; CPI decline; e-commerce impact and so on.
