The current situation of the company
Affected by the epidemic, we expect that the sales of the company's Q1 offline stores may be greatly affected.
In order to reduce the impact of the epidemic, the company actively tested social marketing and live broadcast to bring goods, and then still need to observe the trend of consumption recovery after the epidemic and the effect of the company's strategic transformation.
Comment
1. The epidemic is a drag on short-term performance, and follow-up attention to the recovery of consumption. According to the data of the National Bureau of Statistics, due to the impact of the epidemic, the retail sales of household appliances above the national limit fell by 30% from January to February compared with the same period last year, and many of the company's stores were closed at the peak of the epidemic, which we expect to have a great impact on the company's sales performance in 2020. So far, the company's stores across the country have resumed business one after another.
The company actively cooperated with the national consumption stimulus policy and guided residents' consumption of household appliances by issuing coupons and other forms. On March 18, Gome issued 120 million yuan of household appliances consumption vouchers to Beijing citizens; on March 27, Gome announced that it would hold a digital "Super Brand Day" for home appliances jointly with Pinduoduo.
To promote the activity, it is planned to issue 500 million yuan of consumption coupons to consumers, and follow up to pay attention to the sales recovery of the company's terminal after the epidemic.
2. Actively test the waters of social marketing and live broadcast with goods, and speed up the online layout. ① trial Community Marketing: relying on the "Gome Store" platform, the company provides consumers with free door-to-door delivery services within 3 kilometers of stores. At present, the company has established more than 150000 communities across the country, reaching tens of millions of users, effectively extending the service radius. ② explores live streaming with goods: during the epidemic, the company actively tested live streaming and other new marketing models. According to the "328" Gome Super Live Battle report, from 19:00 to 22:00 on March 28th, Gome's cumulative sales exceeded 113 million yuan, and the number of live streaming viewers exceeded 1.2 million, setting a new sales record. In addition, during the epidemic, Gome further optimized its service experience, set up contactless distribution shelves in some areas, and put forward a number of service guarantees such as "compensation for late delivery" and dissatisfaction with "extreme withdrawal", so as to effectively optimize the service experience and enhance user stickiness.
3. The strategic transformation of the company has entered a deep water period, so pay attention to the effect of follow-up adjustment. The company recently repaid a total of US $478 million in principal and interest on US dollar bonds. since the start of the strategic transformation in 2017, the company has focused on "family life" to provide consumers with an overall solution for home life. We believe that at this stage, the company's strategic transformation, business adjustment is continuing to deepen, the follow-up need to observe the effect of the adjustment, as well as the performance on the operating performance side.
Valuation proposal
Based on the impact of the epidemic and increased competition in the industry, we have lowered our earnings per share forecast for 2019-20 by 9% to-0.02% per share, and introduced a profit forecast of 0.0003 yuan per share in 2021. The current share price corresponds to 0.2 times Pamp S in 2020, maintaining a neutral rating and target price of HK $0.68, and 0.2 times Pamp S in 2020, with 3% room for decline.
Risk.
Competition in the industry continues to intensify, and the impact of the epidemic lasts longer than expected.