2019 the net profit of homing increased by 0.89%. The net profit of 1Q2020 increased by 0.89%-4337 yuan realized business income of 4.936 billion yuan in 2019, down 1.42% from the same period last year; realized net profit of 176 million yuan, equivalent to 0.34 yuan of fully diluted EPS, an increase of 0.89% over the same period last year; and realized net profit of 111 million yuan, a decrease of 23.47% over the same period last year.

1Q2020 realized operating income of 247 million yuan, down 81.44% from the same period last year; realized net profit of-43.37 million yuan, compared with 44.67 million yuan in the same period last year; and deducted non-return net profit of-53.91 million yuan, compared with 36.38 million yuan in the same period last year. Among them, there is a large decline in revenue, in addition to the impact of the epidemic, other companies adjust their income criteria and confirm the impact of income factors according to the net method. Excluding this factor, 1Q2020 operating income decreased by 44.73%.

The 1Q2020 comprehensive gross profit margin is 55.91%, and the period expense rate is 72.30%. In 2019, the company's comprehensive gross profit margin was 19.91%, down 0.23% from a year earlier. 1Q2020's comprehensive gross profit margin was 55.91%, up 36.34% from the same period last year. Mainly due to the adjustment of income criteria. The expense rate during the company period in 2019 was 15.48%, down 0.13% from the same period last year, of which the sales / management / financial expense rate was 11.83%, 3.33% and 0.32%, respectively, and the year-on-year change was-0.28%, 0.10%, 0.25%, respectively. The expense rate of 1Q2020 during the period was 72.30%, an increase of 57.64% over the same period last year, mainly due to the significant reduction in income year-on-year and the relative rigidity of fees under the epidemic.

The proportion of self-owned property is relatively high, and four of the seven stores of Haike Finance layout third-party payment business companies are self-owned properties, accounting for 48.22%, with a certain cost advantage and anti-risk ability. However, in the highly competitive Beijing market, the main retail industry of the company is facing the increased competitive pressure and the risk of regional concentration. In order to broaden the scope of business, the company plans to acquire Haike Finance in the form of additional issues and cash, lay out the third-party payment business, and still need to go through procedures such as examination and approval by the Securities Regulatory Commission.

Downgrade profit forecast and maintain "overweight" rating

Regardless of the impact of the acquisition of Hai Ke Rongtong for the time being, combined with the impact of the epidemic on the company's department store business, we downgrade the company's EPS forecast for 2020-2021 to 0.18 / 0.27 yuan (previously 0.38 / 0.40 yuan), and add 0.32 yuan to 2022. The company's own property accounts for a relatively high proportion, with a certain margin of safety and maintaining the "overweight" rating.

Risk hint: the operating area is more concentrated, and the recovery of middle and high-end consumption is not as expected.