The company's 1Q2019 revenue decreased 3.42% year on year, and Guimu's net profit decreased 2.40% year on year
On April 27, the company announced its 2019 quarterly report. 1Q2019 achieved revenue of 1,329 billion yuan, a decrease of 3.42% over the previous year, greater than the 2.88% decline in 4Q2018. 1Q2019 achieved net profit of 45 million yuan, equivalent to a fully diluted EPS of 0.09 yuan, a decrease of 2.40% over the previous year, while 4Q2018's net profit increased 18.16% year on year. 1Q2019 achieved net profit of 36 million yuan after deducting non-return to the mother, a decrease of 19.39% over the previous year, while 4Q2018 net profit after deducting non-return to the mother increased 3.24% year on year.
The performance fell slightly short of expectations.
The gross margin of 1Q2019 increased by 0.03 percentage points, and the cost rate for the period increased by 0.89 percent. 1Q2019 The company's consolidated gross margin was 19.57%, up 0.03 percentage points from the same period last year. The 1Q2019 company's expenses rate for the period was 14.66%, up 0.89 percentage points from the same period last year. Among them, the sales/management/finance expenses ratio was 11.01%/3.49%/0.16%, respectively, up 0.24/ 0.50/ 0.15 percentage points from the same period of the previous year. The financial expenses of the 1Q2019 company were 2.124,900 yuan, an increase of 2,047 million yuan over 1Q2018. The main reason was the increase in interest on loans.
The main stores have location advantages and a high proportion of owned properties
Competition in the Beijing retail market is fierce. The company's seven operating stores are basically located in the core business district or core community area of Beijing. The Zhongguancun store and Cuiwei store are located in key areas of the Zhongguancun Chuangye Street and Gongzhufen business district upgrading plans, which have certain location advantages. The company has its own property with a construction area of about 194,000 square meters, accounting for 48.2% of its own properties. The four main stores of Cuiwei Store, Zhongguancun Contemporary Mall, Ganjiakou Department Store and Dacheng Road Branch are owned properties. The high proportion of owned properties makes the company have a good cost advantage and resilience to risks.
Lower profit forecasts and maintain the “increase in holdings” rating
Competition in the Beijing retail market is fierce, and it is difficult for the company's revenue growth rate and gross margin to increase significantly in the short term. We lowered our forecast for the company's 2019-2021 EPS to 0.35/ 0.38/ 0.40 yuan (previously 0.38/ 0.43/ 0.46 yuan). The company's current PE (2019E) is 18X, which is significantly lower than the average for the past three years (31X). The current PB (2019E) is 1.0X, which is significantly lower than the average for the past three years (1.5X), 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.