The company's revenue in 2017 decreased 5.57% year on year, and Guimu's net profit increased 28.83% year on year
On the evening of April 22, the company announced its 2017 annual report. It achieved operating income of 5.080 billion yuan in 2017, a decrease of 5.57% over the previous year, and achieved net profit of 144 million yuan, converted to fully diluted EPS of 0.28 yuan, an increase of 28.83% over the previous year, and achieved net profit of 129 million yuan after deducting non-return mother's net profit of 129 million yuan, an increase of 28.43% over the previous year. The performance exceeded expectations. The main reasons for the sharp increase in the company's net profit include: 1) the closing of the loss-making Qinghe store, and 2) the end of amortization of renovation costs for the opening of the Dacheng Road store.
The consolidated gross margin decreased by 0.04 percentage points, and the cost rate for the period decreased by 1.09 percentage points
In 2017, the revenue of the company's department store/supermarket/leasing business was 43.46/ 504/116 million yuan respectively, a year-on-year change of -7.68%/0.42%/-11.90%, respectively. The company's comprehensive gross margin in 2017 was 20.08%, down 0.04 percentage points from the previous year. The company's expenses rate in 2017 was 16.11%, down 1.09 percentage points from the previous year. Among them, the sales/management/finance expenses ratio was 12.34%/3.72%/0.04%, respectively, down 0.88/ 0.06/ 0.16 percentage points from the previous year.
The main stores have a location advantage. They have a high proportion of their own properties. Companies with large brand influence include Cuiwei Department Store Cuiwei Store, Mudanyuan Store, Longde Store, Dacheng Road Store, Contemporary Mall Zhongguancun Store, Dingcheng Store, and Ganjiakou Department Store. They are basically located in the core business district or core community area of Beijing, and have a good location advantage. The company has its own property with a construction area of about 194,000 square meters, accounting for 48.22% of its own properties. The four main stores of Cuiwei Store, Zhongguancun Contemporary Mall, Ganjiakou Department Store and Dacheng Road are owned properties. The high proportion of owned properties makes the company have a good cost advantage and resilience to risks. The company has a high brand awareness and market influence in Beijing. In 2017, the company won titles such as “Beijing Top Ten Commercial Brands Gold Award”, and its brand influence continues to be consolidated.
Raise profit forecasts and maintain the “increase in holdings” rating
We believe that the current recovery trend in the department store industry is obvious. The decline in the company's revenue has gradually narrowed, and expenses have dropped sharply after closing loss-making stores. We have raised the company's EPS forecast for 2018-2019 to 0.30/ 0.33 yuan (previously 0.28/ 0.29 yuan), respectively, and forecast EPS to be 0.36 yuan in 2020, maintaining the “increase in holdings” rating.
Risk warning:
Business regions are concentrated, and the recovery in middle and high-end consumption has not met expectations.