1. Event

In 2013, the company achieved an operating income of 12.7164568 billion yuan, a decrease of 1.53% over the same period last year, and an operating profit of 74.5192 million yuan, an increase of 200.90% over the same period last year. The net profit belonging to shareholders of listed companies was 23.6693 million yuan, an increase of 126.41% over the same period last year. The income per share is 0.0592 yuan.

two。 Our analysis and judgment

Strengthening the control of gross profit margin and strengthening cost control prompted the company to reverse its losses: operating revenue in 2013 decreased by 1.53% compared with the same period last year. The main reason for the decline in revenue from the main business is the decline in sales revenue of comparable old stores in some areas, and slow sales growth during the cultivation of new stores. Among them, the sales revenue of stores in South China decreased significantly compared with the same period last year. The company has continuously deepened the reform of category management to improve the commodity structure, optimized the selection of posters, increased the gross profit margin of promotional goods, optimized procurement channels, reduced the purchasing cost of goods, and other measures to improve the gross profit level. during the reporting period, the comprehensive gross profit margin increased by 0.69 percentage points compared with the same period last year. By optimizing the organizational structure and staffing, process optimization, saving energy and reducing consumption, reducing rental costs, and innovating loss prevention and control measures, we continued to strengthen cost control and improve labor efficiency, and the rate of sales expenses decreased by 0.3 percentage points compared with the previous year. The rate of administrative expenses and the rate of financial expenses were basically the same, and the net interest rate on sales increased by 0.9 percentage points to 0.2% compared with the same period last year. The company's business plan for 2014: to open about 10 new stores, and strive to achieve steady growth in operating income and net profit belonging to shareholders of listed companies.

The speed of opening stores has slowed down, and the existing stores have been continuously adjusted and consolidated. The company implemented the business strategy of "deceleration, adjustment, consolidation and improvement" in 2013, continued to maintain a moderate slowdown in the expansion of new stores, continued to optimize the store network, and opened 10 new stores with a total area of 200600 square meters during the reporting period; due to the termination of the contract by the owner and the long-term loss of the store, two stores in Shenzhen seaside store and Pinghu store were closed. By the end of the reporting period, the company has settled in more than 30 cities in 10 provinces (autonomous regions / municipalities directly under the Central Government) and opened 128 stores, covering an area of more than 1.9 million square meters.

To strengthen the management of fresh goods, home appliances and knitted textiles were greatly affected by the impact of e-commerce: the proportion of sales of various categories did not change significantly during the reporting period, and the sales of food and fresh products accounted for a slight increase over the previous year, reaching 54.58%. Home appliances and knitted textiles were greatly affected by the impact of e-commerce, and sales revenue declined greatly compared with the same period last year. In 2013, on the basis of the previous reform in the management of vegetable commodities, the company continued to comprehensively promote the reform of the management of fresh commodities, expand the scope of self-management of fresh goods, strengthen the docking of base development and agricultural super, and promote the centralized processing and unified distribution of cooked food centers, as well as the construction of a central kitchen, so as to enhance the competitive advantage of fresh goods and give full play to the customer gathering function of fresh goods. At the same time, in order to strengthen the management of fresh goods and realize the centralized sorting, processing and distribution of fresh goods, start the construction of normal temperature warehouse (No. 2 warehouse) and fresh storage in Xi'an and Tianjin distribution centers.

Speed up the construction of distribution centers. The company has four operating regions in South China, Northwest, Southwest and North China. In order to meet the needs of regional development, four major logistics distribution centers have been built: Guangzhou, Chengdu, Xi'an and Tianjin. At present, Guangzhou distribution center has been put into use, the other three distribution centers are under construction, Chengdu is expected to invest in 14 years, Xi'an next year, Tianjin later. The use of the logistics distribution center will help the company to solve the out-of-stock rate, reduce loss and cost, and improve business efficiency.

Xi'an, Nanning and Chengdu are still the company's main profitable subsidiaries: during the reporting period, Xi'an, Nanning and Chengdu subsidiaries had a total sales income of 5.712 billion yuan, accounting for 45% of the total operating income, and a total net profit of 310 million yuan. the total operating income and net profit increased by 4.82% and 13.6% respectively compared with the same period last year. Other subsidiaries, except Xianyang subsidiary, are in a state of loss.

3. Investment suggestion

The two principles of commercial chain operation are to open intensive stores to improve economies of scale and to improve logistics and distribution warehousing to reduce costs. In the past two years, the company's South China region has been greatly separated from the company's performance due to the decrease in the number of migrant workers from the industry and the fierce industry saturation competition. At the same time, the South China, Northwest, Southwest and North China fronts are too long, and the scale and brand advantages have not been formed in the short term.

On the one hand, the company strengthens the management of fresh commodities, promotes the direct mining of agricultural products base, enhances the competitive advantage of fresh commodities, and increases the effect of gathering customers; on the other hand, it optimizes the commodity structure and category management, and carries out more targeted cost control and other measures. increase gross profit margin and reduce expense rate to reverse losses.

In the next step, the company should consolidate and enhance the dominant position of Xi'an, Nanning and Chengdu, and close the long-term loss stores without improvement to stop the bleeding. The company still adopts the business strategy of "deceleration, adjustment, consolidation and improvement", and the number of stores is expected to be 10 in 14 years as in 13 years.

It is estimated that the EPS of the company in 14-16 years is 0.13,0.21,0.27 yuan respectively, and 79.9,48.6,37.8 times for PE. We give the company a neutral rating.