I. Overview of events
We investigated Xujiahui and communicated with senior executives about the company's operation and future development plans.
II. Analysis and judgment
The main business is stable, and the opening of the new store contributes to the income.
The company's main business has developed steadily, with its own brands such as Huijin Department Store, Shanghai six hundred, Huilian Mall and Huijin supermarket, which has a strong competitive advantage in Shanghai and occupies a high market share in Xujiahui business circle. The company's sales model includes joint sales, self-management and property rental, in which joint marketing is the main mode of operation, the department stores and suppliers settlement deduction rate, gross profit margin remains at a relatively stable level. This year, Huijin South Station store is officially operated in the form of "Urban Olai", with good sales and contributing income.
Actively layout all channels, online and offline integration and development
In recent years, the company actively layout online business, based on years of experience in implementing single product management, independently developed a "ERP+APP" integrated mobile e-commerce system-E-MEC system, based on single product (SKU) management, synchronously support detailed goods (SKC) inventory management, and lay the foundation for O2O omni-channel integration. At present, the system has been applied in some counters of Huijin department store Xuhui store and Hongqiao store, and the function will be continuously improved and gradually implemented to other stores in the future. At the same time, Huijin APP was officially launched in July and has been gradually promoted through the introduction of online special offerings and the issuance of coupons. In addition, the company uses Wechat marketing to fully interact with consumers and effectively enhance customer stickiness. We believe that the company may accelerate the coordinated development of online and offline business and build a new retail model based on omni-channel.
Cash flow is stable and high dividends are expected to continue.
The company has stable cash flow and has maintained a high cash dividend since its listing, with a dividend rate of about 60% in the past three years, and the dividend rate in the past 12 months ranks in the forefront of the industry. The high return to shareholders in the future is expected to continue, with long-term allocation value. In addition, the company is ultimately controlled by Xuhui District SASAC. With the gradual deepening of the reform of state-owned enterprises in Shanghai, the development prospect of the company is worth looking forward to.
Third, profit forecast and investment suggestions
The steady development of the company's main business, continue to deepen the layout of online business, the future is expected to increase efforts to expand the new retail model based on omni-channel. It is estimated that the EPS for 2016-2018 will be 0.61 plus 0.63 PE, corresponding to 0.66 times that of 31-30-29. It will be covered for the first time and will be given a "highly recommended" rating.
IV. Risk hints
The macroeconomic downturn has led to a downturn in consumption and lower-than-expected online business expansion.