Decreased inventory prices and gross margin fell sharply in 2019. The 20Q1 results were still pressured by the company to achieve operating income of 17.874 billion yuan in 2019, a decrease of 16.99% over the previous year. Net profit of the mother was -2,708 million yuan, which turned into a loss after deducting non-net profit of 2,686 million yuan, and EPS-174 yuan.
The large net profit loss was mainly due to Global Tesco preparing for a large inventory price drop of 2,589 billion yuan. At the same time, gross margin dropped significantly.
The company achieved operating income of 4.497 billion yuan in 20Q1, a decrease of 4.79% over the previous year; Guimu's net profit was 131 million yuan, a decrease of 41.08% over the previous year, mainly due to a decrease in gross margin and an increase in asset impairment losses, EPS 0.08 yuan.
Revenue split: 1) Looking at subsidiary companies, the revenue of Global Tesco, Patson, and Youyi e-commerce in 2019 was 8.506 billion yuan (-31.44% compared to the same period last year), 3.439 billion yuan (+0.62%), and 5.871 billion yuan (-4.48%), and net profit was -2,652 million yuan (-25.14%), respectively. The sharp decline in Global Tesco's operating income was mainly due to the decline in sales scale in the European and American markets due to trade frictions between China and the US. Furthermore, the company adjusted its business strategy and cancelled a number of overseas localization projects, creating a corresponding inventory backlog, thus calculating a large amount of depreciation. 2) By business, cross-border export and import e-commerce revenue was 11.417 billion yuan (-26.27%) and 6.256 billion yuan (-14.96%) respectively.
Gross margin declined significantly, asset impairment losses increased sharply, and there was pressure on cash flow. Gross margin fell 6.95 PCT to 33.64% year on year 19, and 10.20 PCT fell to 33.10% year on year in 20Q1. The cost rate for the period decreased slightly by 0.47 PCT to 33.87% year on year 19, and the year-on-year decrease of 8.35 PCT to 28.60% in 20Q1. Among them, the sales expense ratio decreased by 6.59 PCT, which dropped significantly.
Inventories decreased by 40.06% for the full year of '19, the end of March '20 decreased by 14.36% from the beginning of the year, down 44.82% year on year, accounts receivable decreased by 30.82% for the full year of '19, and the end of March '20 increased 30.98% from the beginning of the year. A large amount of inventory price reduction was calculated in 2019 to prepare 2,589 million yuan, and the inventory calculation ratio at the end of the year was 47%.
Net operating cash flow fell sharply by 80.84% year-on-year in 2019 to $35 million, and 20Q1 turned negative by -647 million yuan.
The impact of the epidemic on performance is under pressure, and external risks are high. Focus on the recovery of domestic and foreign demand, taking into account the impact of the epidemic at home and abroad. At the same time, the company exports to many countries and regions and has high external risks. The EPS for 20 to 21 and the addition of 22 was lowered to 0.15/0.32/0.54 yuan, 37 times PE for 20 years, and downgraded to a “neutral” rating.
Risk warning: The impact of the epidemic at home and abroad has exceeded expectations, causing demand to continue to weaken; downward pressure on inventory prices; cash flow risk.
