1~3Q18 performance is basically in line with expectations.
Beijing Jingkelong announced its results for the first three quarters of 2018: operating income was 8.87 billion yuan, down 2.9% from the same period last year, and its net profit was 40 million yuan, up 32% from the same period last year, basically in line with expectations. On a quarterly basis, Q3/Q2/Q1 revenue and net profit are + 7.5%, 12.9%, 4.0% and + 200%, 28.7%, 17.5%, respectively, respectively.
Trend of development
1. The revenue end has improved. Revenue from the main business in the first three quarters was-3.6% compared with the same period last year. From a quarterly point of view, the growth rate of Q3/Q2/Q1 's main business revenue was + 7.7%, respectively, 15.7% and 3.8%, respectively, and picked up in the third quarter. In terms of business, the retail / wholesale business in the first three quarters was-3.9%, respectively, compared with the same period last year. The decline in retail business expanded, only convenience stores recorded + 6.3% growth, and other formats showed a downward trend, which we expect to be related to the adjustment of outlets. Wholesale business has picked up somewhat, and the impact of e-commerce commodity structure adjustment is expected to be alleviated to Q3. In terms of network layout, the net closure of 12 to 206 stores in the third quarter alone, the adjustment is still continuing.
2. The operating efficiency needs to be improved. The company's gross profit margin in the first three quarters was 22.4%, an increase in 0.5ppt compared with the same period last year. According to the format, the gross profit margin of retail / wholesale business is + 0.01/-0.16ppt respectively compared with the same period last year. From the cost point of view, the rate of sales expenses / management expenses increased by 0.3/0.3ppt respectively compared with the same period last year, and the operating efficiency still needs to be improved. Operating profit margin fell 0.4ppt compared with the same period last year, while net profit margin benefited from the increase in non-operating income, which improved 0.1ppt.
3. The upgrading of business format is expected to improve the medium-and long-term growth prospects. In the face of fierce market competition, the company continues to promote its own reform. The retail business will actively explore the upgrading of the format, start the digital transformation of stores, and strengthen the online operation of fresh goods, which is expected to promote the continuous improvement of store operation efficiency. Wholesale business to strengthen channel expansion, continue to enrich brand resources, while speeding up the development of logistics business, the comprehensive competitiveness is expected to be further enhanced.
Profit forecast
Keep the 2018 Lexus 19e profit forecast RMB 0.12 RMB 0.14 per share unchanged.
Valuation and suggestion
The current share price of the company corresponds to 18max, 1919, 10pm, 9x Pamp E. Maintain a neutral rating. However, based on the market risk preference for downside risk, the target price is reduced by 5% to 1.71 yuan, corresponding to 10 times Pamp E in 18 / 19, which has 16% room compared with the current stock price.
Risk
Consumption continues to be weak; industry competition intensifies.
