1H2017 revenue decreased 6% compared with the same period last year, and the return net profit increased by 30% year on year. On August 26, the company announced that 1H2017 realized operating income of 2.529 billion yuan, a decrease of 6.08% over the same period last year, and realized return net profit of 59 million yuan, equivalent to 0.11 yuan of fully diluted EPS, an increase of 30.13% over the same period last year. The net profit of non-return was deducted from RMB 58 million, an increase of 43.37% over the same period last year. Judging from the split in a single quarter, the company's 2Q2017 achieved operating income of 1.173 billion yuan, a decrease of 5.85% over the same period last year, which was less than the 6.28% decline in 1Q2017. 2Q2017 realized a net profit of 21 million yuan, an increase of 99.99% over the same period last year, which was greater than the 8.74% growth of 1Q2017.
The decline in business income is mainly due to the termination of Qinghe store, excluding the Qinghe store closure factor, down 2.31% from the same period last year. The main reasons for the large increase in the company's performance are: 1) the performance base is low, and the net profit of 1H2016 company has dropped by 40.10% compared with the same period last year; 2) the Qinghe store, which has been losing money for many years, is closed, and the amortization period of decoration expenses for the opening of Dachenglu store is over.
The comprehensive gross profit margin decreased by 0.29%, and the expense rate during the period decreased by 1.65%. The lease contract of Qinghe store was terminated and terminated on January 3, 2017, and the number of department stores decreased to 7, with a total construction area of 402600 square meters. among them, the self-owned property is 194, 000 square meters, and the leased property is 2086, 000 square meters. The main business income of 1H2017 Company was 2.466 billion yuan, down 5.81% from the same period last year. In terms of different business formats, the operating income of the company's commodity sales / leasing business was 2.4130.53 billion yuan respectively, down 5.53% / 16.73% respectively from the same period last year. 1H2017's consolidated gross profit margin was 19.88%, down 0.29% from a year earlier. In terms of business format, the gross profit margin of the company's commodity sales / leasing business is 17.79% / 41.39% respectively, which is 0.01 /-2.34 percentage points higher than that of the same period last year. The period expense rate of 1H2017 was 15.53%, down 1.65% from the same period last year, of which the sales / management / financial expense rate was 12.05% / 3.41% / 0.07%, respectively, down 1.02 / 0.46 / 0.17% from the same period last year.
The effect of reducing fees and losses appears, and there are signs of recovery in middle and high-end consumption.
The company ploughed deeply into the Beijing retail market, 1H2017 continued to promote business structure, layout and brand adjustment, carried out business dress adjustment of Peony Garden Store, Dacheng Road Store and Cuiwei Store, introduced and opened the new retail format "Box Horse Xiansheng" of Dacheng Road Store, completed the termination of contracts related to Qinghe store closure, and the placement of merchants and personnel was completed, showing the effect of fee reduction and loss reduction. The contemporary mall 1H2017 realized operating income of 558 million yuan, down 0.40% from the same period last year, and realized a net profit of 14.2447 million yuan, an increase of 43.75% over the same period last year. In addition, in recent years, the company has tried to extend to the areas of service consumption such as education, culture and tourism through investment. In July 2016, the company signed a "Cooperation School Agreement" with Beijing Haihai State-owned assets Investment and Management Co., Ltd., Beijing Daoqin Investment Management Co., Ltd., and jointly invested in the establishment of Beijing Haidian International Education Investment Co., Ltd., with a shareholding ratio of 15%, which is conducive to invigorating the company's funds.
Raise profit forecast and maintain "overweight" rating
The company's 2016 net profit fell 32.51% from a year earlier, with a low performance base. The company has effectively reduced fees and losses by closing loss-making stores, and we have raised our forecast for the company's fully diluted EPS from 2017 to 2019 to 0.29 / 0.31 / 0.33 yuan (previously 0.23 / 0.24x0.25 yuan). The price-to-earnings ratio is expected to enter the operational range and maintain the "overweight" rating.
Risk hint: the effect of store adjustment is not as expected, and the recovery of middle and high-end consumption is not as expected.