The company achieved revenue of 5.007 billion yuan in 2018, and its net profit increased by 20.91% over the same period last year.
On April 20, the company announced its 2018 annual report that its operating income in 2018 was 5.007 billion yuan, down 1.43% from the same period last year. The net profit of returning to the mother was 175 million yuan, equivalent to 0.33 yuan of fully diluted EPS, an increase of 20.91% over the same period last year, and the net profit of non-return was 146 million yuan, an increase of 12.93% over the same period last year. On a quarterly split, 4Q2018's revenue fell 2.88% from a year earlier, less than the 3.33% decline in 3Q2018. 4Q2018's homed net profit rose 18.16 per cent year-on-year, an increase greater than the 8.08 per cent increase in 3Q2018. The performance is in line with expectations. The main reason for the significant increase in the company's net profit in 2018 is that the expense rate during the period decreased by 0.50 percentage points compared with the previous year.
The gross profit margin rose by 0.07 percentage points in 2018, and the expense rate decreased by 0.50 percentage points during the period.
The company's comprehensive gross profit margin in 2018 was 20.15%, up 0.07 percentage points from the previous year. The company's expense rate during the 2018 period was 15.60%, down 0.50% from the previous year, of which the sales / management expense rate was 12.11% / 3.43% respectively, down 0.24 / 0.29% from the previous year. The decrease in the rate of sales expenses is mainly due to the reduction of depreciation expenses and advertising expenses, while the decrease in the rate of management expenses is mainly due to the reduction of labor costs.
The main stores have the advantage of location and a high proportion of self-owned property.
The company's seven operating stores are basically located in the core business district or core community area of Beijing. Zhongguancun shop and Cuiwei store are located in the key areas of the upgrading planning of Zhongguancun Entrepreneurship Street and Princess grave Business District. The company has its own property construction area of about 194000 square meters, and its own property accounts for 48.2%. The four main stores of Cuiwei Store A, Contemporary Mall Zhongguancun Store, Ganjiakou Department Store and Dacheng Road Store are self-owned property. the higher proportion of self-owned property makes the company have a better cost advantage and anti-risk ability.
Raise profit forecast and maintain "overweight" rating
After the company closed its loss-making Qinghe store in 2019, its expenses declined obviously. Since 2019, the recovery of optional consumption has been significantly strengthened, and the company's department store business is expected to benefit. We have raised our forecast for the company's EPS in 2017-2020 to 0.38 / 0.43 yuan (previously 0.36 / 0.39 yuan), and the new forecast for the company's 2021 EPS will be 0.46 yuan. The company's current PE (2019E) and PB (2019E) are significantly lower than the average of the past three years, maintaining the "overweight" rating.
Risk hint: the operating area is more concentrated, and the recovery of middle and high-end consumption does not meet expectations.