The company's 1Q2019 revenue increased by 44.91% compared with the same period last year, and the return net profit increased by 6.67% compared with the same period last year.
On April 30, the company reported that 1Q2019 achieved 983 million yuan in revenue, up 44.91% from the same period last year, while 4Q2018 revenue fell 2.05% from the same period last year. 1Q2019 achieved a net profit of 31 million yuan, equivalent to 0.03 yuan of fully diluted EPS, an increase of 6.67 percent over the same period last year.
The performance exceeded expectations. The main reasons for the company's 1Q2019 revenue increase are: 1) the company's retail business realized revenue of 775 million yuan, an increase of 56.93% compared with the same period last year; 2) the commodity category adjustment of the company's supply chain management business was strong, and the 1Q2019 revenue increased by 101 million yuan compared with 1Q2018.
1Q2019 gross profit margin decreased by 8.27%, while expense rate increased by 0.42% during the period.
1Q2019's comprehensive gross profit margin was 19.19%, down 8.27% from the same period last year, mainly due to: 1) the company's retail business stepped up promotion efforts, gross profit margin decreased by 2.26% compared with the same period last year, and 2) the proportion of supply chain management revenue with low gross margin increased significantly. The period expense rate of 1Q2019 was 13.25%, an increase of 0.42% over the same period last year. The sales / management expense rate of 1Q2019 decreased 0.33 / 0.18 percent year-on-year, while the financial expense rate increased 0.92 percent year-on-year, mainly due to the increase in loan size.
The operation of the original stores in Fujian has improved significantly, and the newly-built Lanzhou Center has officially opened.
Before 2017, the construction of Fuzhou subway had a great negative impact on the company's main store, Fuzhou Dongbai Center. In the second half of 2018, Pavilion An and B of Fuzhou Dongbai Center reopened and Hall C was put into operation. The whole Dongbai Center has a construction area of about 150000 square meters and is located in the center of Fuzhou. The company built a new Lanzhou center in Gansu, with a construction area of about 200000 square meters, owned by the property, and officially opened in January 2019, which is expected to become a new performance growth point of the company. Revenue of the company's retail business increased by 50% year-on-year in 2018. Revenue from 2019Q1 increased by 57% year-on-year.
Raise profit forecast and maintain "overweight" rating
Since the second half of 2019, the business status of the company's original stores in Fujian has improved significantly. At the beginning of 2019, the company's newly built Lanzhou Center was officially opened, which is expected to become a new performance growth point of the company, and the current cost control of the project is effective. We raised our forecast for the company's fully diluted EPS from 2018 to 0.29 / 0.30 / 0.31 yuan respectively (0.09 / 0.10 / 0.11 yuan). At present, the company's PB (2019E) is 1.9x, significantly lower than the average of the past three years (3.3x), maintaining the "overweight" rating.
Risk hint: the recovery of retail business did not meet expectations, and the cultivation of Lanzhou Central Project did not meet expectations.