The results in the first three quarters of 2020 are in line with our expectations
YouA AG announced 1-3Q2020 results: revenue was 3.843 billion yuan, down 13.1% from the same period last year; net profit from home was 166 million yuan, down 48.5% from the same period last year, corresponding to 0.12 yuan per share, close to the upper limit of the performance forecast range; net profit after deduction was 181 million yuan, down 43.9% from the same period last year.
On a quarterly basis, 2020Q1/Q2/Q3 revenue is-30.4% compared with the same period last year; net profit is-76.6%, 47.8%, 12.1%, respectively, and Q3 is better than the previous year.
Trend of development
1. Q3 revenue growth is back to normal. Revenue in the first three quarters fell 13.1% compared with the same period last year, mainly due to a sharp drop in passenger flow due to the impact of the epidemic in the first half of the year, and the return of sales in Wuyi Square, a subsidiary of Changsha, due to the termination of the original contract for the transfer of management rights. Q3 revenue growth rate of + 7.9%, reversing the sharp decline in the previous two quarters, mainly due to the easing of the epidemic, the company responded to the government's policy of promoting consumption, actively carried out a number of marketing activities, so that sales and passenger flow significantly recovered.
2. Cost control has achieved results, boosting Q3 net profit margin. Gross profit margin in the first three quarters fell 2.8ppt to 18.3% year-on-year, mainly because the company gave preferential policies to suppliers and partners during the epidemic, with gross profit margin falling 1.9ppt to 19.8% in the third quarter compared with the same period last year. On the expense side, the sales expense rate in the first three quarters increased by 0.9ppt to 8.0% compared with the same period last year, of which the sales expense rate in the third quarter decreased by 1.5ppt to 7.7%; in the first three quarters, the management + R & D expense rate increased to 9.4% compared with the same period last year, and the management + R & D expense rate decreased by 1.2ppt to 8.5% in the third quarter. The financial expense rate increased by 1.1ppt to 4.2% year-on-year, with the financial expense rate falling by 0.2ppt to 4.0% in the third quarter compared with the same period last year. In the end, net profit margin in the first three quarters fell 3.0ppt to 4.3 per cent year-on-year, while net profit margin after deduction fell 2.6ppt to 4.7 per cent year-on-year. Boosted by the decline in expense rates during the period, net profit margin after deduction rose 0.2ppt to 5.6 per cent year-on-year in the third quarter.
3. Pay attention to the new progress in the layout of the company's diversified retail formats. The company actively promotes the innovation and expansion of retail formats to cope with the intensified competition in the retail industry. 1) Innovation of department store format: recently, the company opened the operation of "Yueyang Friends Aoutres" in Hunan, which operates in a direct business mode, integrating leisure, entertainment, catering, culture and other formats. We expect to enhance the company's competitiveness in Hunan retail. 2) Duty-free retail of cosmetics: the company's first "Youa Zhonghua Beauty-free Cosmetics Store" in cooperation with China Duty Free goods (Group) Co., Ltd. has been officially opened. we expect the company to take advantage of China Free to purchase scarce products in the market at the source of the commodity supply chain to expand the duty-paid retail business of international high-end cosmetics. 3) controlling shareholder Youa Holdings has set up a project company in Haikou Jiangdong New area, and plans to invest about 1 billion yuan to carry out international luxury supply chain, cross-border e-commerce, duty-free shopping malls and other business. we expect the company to enter the Hainan regional market, enrich business diversity and expand market scope, and further enhance overall competitiveness.
Profit forecast and valuation
Leaving the 2020-21 earnings forecast unchanged, the current share price corresponds to a price-to-earnings ratio of 28 / 18 times 2020 / 2021. Maintain the outperform industry rating, keep the target price unchanged at 4.75 yuan, and correspond to the 2020 gamble price / earnings ratio of 32 / 20 in 2021, which is 13.4% higher than the current stock price.
Risk.
Competition in the industry has intensified and consumption has remained depressed.