Report guide
The company announced on April 10 that it signed a strategic cooperation agreement with Beijing Zhihui Chengxun, an offline operator service provider for the JD Mall. It took 10% of its shares and began to work with it to build a smart retail management system platform at the JD Home offline smart retail demonstration store.
Key points of investment
Joining hands with JD for new offline retail, the smart system big data business opened up new markets, and after going online, the Internet giants entered the offline market one after another to lay out the offline market, and various new types of retail companies have sprung up. The company itself has been stocking up the smart system and big data business for many years. After starting to promote household products last year, it is now starting to join hands with JD to explore the new retail store market, opening up a new market for the company's smart system big data business.
We believe that in the new retail era, interactive analysis of online and offline data can position and push customers more accurately and give customers a better shopping experience. At the same time, it is also possible to differentiate delivery to different offline stores and improve the efficiency of warehousing and logistics. The company's intelligent system platform and original hardware equipment can not only meet the needs of the new retail model during the layout period, but also perform more data analysis and operation for customers through its own big data capabilities. The new offline retail model is still in its early stages. The subsequent market and number of stores are extremely large. The company is expected to use this entry to cooperate and replicate more stores and more customers. The company's current strategic plan is 30 companies in 2018, 100 companies in 2019, and more than 1000 companies by the end of 2022. We believe that the speed and scale of the development of new offline retail is likely to bring more demand than expected to the company. If the demonstration store succeeds, the company's business in this area will probably also greatly exceed the number originally planned.
Profit forecasting and valuation
Excluding new retail business and outreach, we expect the company to achieve revenue of 4.5 billion, 6 billion, and 7.5 billion yuan respectively, net profit of 110 million, 145 million, 212 million, and EPS of 0.13 yuan, 0.17 yuan, and 0.25 yuan respectively. We believe that the company is at an inflection point in its development and will have a high growth rate in the future, giving it an “increase in holdings” rating.
Risk warning
Traditional business orders fell short of expectations, PV supply progress fell short of expectations, and sales of intelligent systems fell short of expectations.