Main points of investment

Core point of view: Xujiahui, the excellent risk aversion target of Zhongcang plate, the state-owned enterprises in Shanghai are heating up and increasing flexibility. Taking into account Xujiahui gross profit margin, net profit rate, inventory turnover and ROE and other indicators, the company's operating capacity is in the forefront of the industry, obvious advantages. And the company continues to promote E-MEC, comply with the general trend of online and offline integration, and is expected to maintain fundamental stability in the future. Since the listing of the company, the total dividend yield ranks first in the commercial and retail sector. in the market that continues to fluctuate, the nature of corporate bonds can be used as an excellent risk aversion target. In addition, the reform of state-owned enterprises continues to heat up. As a pioneer, Shanghai is expected to take the lead in starting the state reform, and Xujiahui is expected to be the first to benefit. Taking into account the nature of the company and market sentiment, we continue to give the company 28.0XPE in 2016, corresponding to the target price of 17.52 yuan, which has 34% space relative to the current stock price. The competitive pressure of Xujiahui business circle to maintain the "buy" rating is far less than that of Nanjing Road business circle. Xujiahui upstream high bargaining power ensures strong profitability, and the return on net assets is among the highest in the industry. The company has obvious advantages in terms of gross profit margin and net profit margin. In the department store sector, Xujiahui's gross profit margin is 30.7%, second only to Nanjing Xinbai, ranking second in the department store plate; in terms of net profit rate, Xujiahui's net profit rate is as high as 13.21%, ranking first among listed companies in department stores, far exceeding the second place in Guangzhou Friendship. According to the analysis, considering the competitive pressure, although the number of people in Xujiahui business circle is not as good as that in Nanjing road business circle, the number of shops per unit area in Xujiahui business circle is far less than that in Nanjing road business circle, and the bargaining power of suppliers in each store may be weaker than that in Xujiahui business circle, which has fewer core stores. In terms of profitability, Xujiahui business circle is no less profitable than Nanjing road business circle, and Xujiahui has obvious advantages in benefiting from it. Reflected in the return on net assets, Xujiahui net assets income 13.2%, ranking in the forefront of the industry. In addition, Xujiahui has an obvious advantage in inventory turnover, which reflects the company's short-term solvency. Generally speaking, the operating ability of the company is relatively excellent.

Xujiahui dividend yield continues to maintain a strong stability, the total dividend yield ranks first in the trade and retail sector, the market style prefers high dividend targets, and is expected to benefit first. Since its listing in 2011, the company has maintained an annual dividend yield of more than 2.5% and a dividend payout rate of more than 60%.

After adding up the total dividend of each year, we calculate that the total dividend yield of the company (the total dividend since listing divided by the current market value) is 16.25%, which ranks first in the commercial and retail sector, and is the target of high-quality bonds in the commercial and retail sector. From an analytical point of view, we believe that the main reason is that the company's fundamentals are relatively stable and the cash flow is abundant. Under the condition that the traditional retail boom continues to decline, the company's net profit and cash flow are relatively stable, and the higher dividend payout rate over the years shows a better corporate governance environment to maximize the interests of shareholders. in the case of a high margin of corporate safety, it is worthy of long-term allocation of value investors. In the market continues to fluctuate, from the perspective of dividends, the company is an excellent risk aversion target.

The company continues to expand the department store business, intensive cultivation as the strategic direction, the process of E-MEC system is advancing steadily. 1) in the second half of 2015, the company will continue to make detailed adjustments to the four stores to dynamically meet the needs of major customers, including Huijin Department Store introducing fashionable and exquisite catering brands; Hongqiao Store expanding the category of ladies' clothing and supporting the sale of "Star Brands"; Shanghai 600 increases the cross-floor adjustment of goods; Huilian Mall actively participates in the renovation project of Xujiahui business district flyover. 2) relying on many years of SKU and physical store operation experience, the company has formed a research and development team with the Software School of Shanghai Jiaotong University to develop online and offline fully integrated "ERP+APP" mobile e-commerce (E-MEC) since 2014. At present, the first phase of E-MEC software function "electronic invoice" has been launched at some counters of Huijin department store. In the future, the company will actively expand the scope of application of E-MEC software and promote Huijin Department Store to fully realize the simultaneous online and offline operation of "single product, inventory, order, promotion, payment, data" and other functions. In the current environment of Internet +, the company actively embraces the Internet and works hard to ensure steady growth in future performance.

Shanghai's national reform continues to heat up, and Xujiahui is expected to be the first to benefit. At present, new progress has been made in the reform of state-owned enterprises and is expected to enter the final battle. Shanghai, as the forefront of the reform of state-owned enterprises, the relevant targets of state-owned assets are expected to continue to receive market attention. Xujiahui, as the only listed company under Xuhui District SASAC, is expected to benefit first if Shanghai state-owned enterprises go first.

The target price is 17.52 yuan, and the target price has 34.2% space relative to the current price, maintaining the "buy" rating. We estimate that the net profit of the shareholders of the company belonging to the parent company from 2016 to 2018 is 2.60,2.67 and 277 million yuan respectively, and the diluted earnings per share are 0.63,0.64,0.67 yuan respectively, an increase of 2.84%, 2.70% and 3.63% respectively. Based on the closing price on July 28, 2016, the corresponding PE for 2016-2018 is 20.71,20.39,19.48 times. We value the company on the basis of revaluation and current market preferences, consider good operating conditions and stable high dividends, and continue to give a "buy" rating to 28.0XPE in 2016, corresponding to the target price of 17.52 yuan and 34.2% relative to the current stock price.