Event
In the first half of 2017, the company achieved operating income of 2.749 billion yuan, up 9.32% from the same period last year, and realized net profit of 87.5329 million yuan, down 20.55% from the same period last year. During the reporting period, operating income and net profit belonging to shareholders of the parent company completed 48.74% and 67.33% of the annual business plan, respectively.
Deeply ploughing the retail industry, the main business has developed steadily
The company continues to dig deep into the retail industry, and the operating income of its main business has increased steadily. In the first half of 2017, the company promoted the reform and adjustment of the two major retail entities, Hangzhou Mansion and Xiebai Commerce, to further clarify the market positioning and improve the security work. The company's main business business trade services achieved business income of 2.63 billion yuan, an increase of 9.20% over the same period last year, and the income of the main business is still rising steadily. The operating cost of the main business was 2.127 billion yuan, up 9.57% from the same period last year. The gross profit margin was 19.13%, 0.28 percentage points lower than that of the same period last year. The sales expenses were 176 million yuan, up 5.98% from the same period last year; the management expenses were 180 million yuan, up 21.63% from the same period last year; and the financial expenses were-1.6302 million yuan, up 67.08% from the same period last year. The larger increase in management and financial expenses is mainly due to the increase in staff salaries and the decrease in deposit interest income.
Actively explore retail + big data to promote the construction of new projects
The company began to actively explore the retail + big data work, and continue to promote new projects. In the first half of 2017, the company has docked and communicated with a number of big data companies, and is gradually defining the direction of big data's work and the entry point for integration with the main retail industry. Through data mining and analysis, we can better understand and insight into consumers, achieve accurate marketing, fine management of goods, etc., so as to drive marketing and cost control, and further promote the growth of business income. In addition, the new B (Sanli) project of Hangzhou Mansion has started trial operation, the preparatory work for the Wulin underground central square project has been steadily advanced, and the investment promotion work has been started in an all-round way. Hangzhou Mansion is adjacent to the West Lake and has a superior geographical location. The landing of the new project will bring new profit growth points for the company.
The industrial extension has achieved initial results, and the transformation should be in response to the industry change.
The company actively tries to expand to sports, health care and other industries. Since the company increased capital to control Yuesheng Sports, the revenue of sports brokerage business has made great progress. In the first half of 2017, Yuesheng Sports, a subsidiary of the company, focused on the promotion of the World Tour, the City League Amateur Football Championship and the Qiandao Lake International Road Cycling Race in Hangzhou, China, as well as investment promotion preparations. At the same time, the layout of physical education and training, the cooperation of stadiums and stadiums and the promotion of rugby school projects. In the first half of 2017, the operating income of the company's sports brokerage business was 1.8742 million yuan, an increase of 405% over the same period last year. In addition, the whole process Health is an important associate of the company, and it is also a key investment project for the company to explore the medical and health business. in the first half of 2017, the whole process Health completed all the preparatory work before the opening of the business, and plans to start business in mid-August. Although sports brokerage business and health care business are still in the period of cultivation, the prospect is promising, which is an important measure for the company to achieve transformation in the downward environment of the retail industry.
Profit forecast and valuation
We estimate that the operating income of the company from 2017 to 2019E is 5.447 billion yuan, 5.949 billion yuan and 6.497 billion yuan respectively, and the net profit of returning mother is 234 million yuan, 259 million yuan and 286 million yuan respectively, and the corresponding EPS is 0.33,0.36 yuan and 0.40 yuan. According to yesterday's closing price of 10.19 yuan, the price-to-earnings ratios were 31x, 28X and 25, respectively. In the future, the fresh business developed in cooperation with Yonghui supermarket will have a positive impact, bringing more room for imagination for the company's performance. We give the company a price-to-earnings ratio of 35X, with a stock price of 11.55 yuan in the next 12 months, covering for the first time. Give a "buy" rating.
Risk hint
The development of the department store industry is poor, the business scale and profits are declining, and the investment projects are not as expected.