Cross-border e-commerce is booming, and the company's business is expected to pick up further.
Cross-border Tong is the first cross-border e-commerce company to be listed on A-shares. As a representative of big-selling players, the company has ZAFUL, Gearbest and other well-known channel brands, mature product operation strategy and rich marketing experience, through the "shop" model to build a more obvious cost advantage. Although the problem of high inventory risk has been exposed to a certain extent due to the deterioration of the business environment and the intensification of competition in recent years, some of the pressure on the statement has been alleviated by means of active "small profit and quick turnover" strategy and inventory impairment. Inventory and gross profit margin have improved. Cross-border e-commerce is booming, and the company's business is expected to pick up gradually. we expect the company's EPS to be 0.23,0.39,0.50 yuan respectively from 2020 to 2022, with a target price of 6.63 yuan, giving a "overweight" rating for the first time.
Cross-border e-commerce "export + import" double cycle, with a number of well-known channel brands have global e-commerce companies, Youyi e-commerce, Patusson three cross-border e-commerce enterprises, three subsidiaries of 2020Q1-Q3 contributed 99.7% of the company's revenue. Among them, Globe Tesco focuses on cross-border B2C export e-commerce business, mainly through proprietary channels, supplemented by third-party channels, its e-commerce platforms ZAFUL and Gearbest have been on the list of "BRANDZ China Top 50 Brands" for many years in a row; Patronson's main consumer electronics, products mainly rely on third-party platforms for sales, a number of products on the list Amazon Bestseller; Youyi Baby mainly engaged in cross-border import business, the core category of mother and infant, personal care is the current focus.
Short-term operation is under pressure, inventory and gross profit margin have improved to some extent.
Affected by the trade friction between China and the United States, the scale of exports to Europe and the United States has declined, and the tight operating cash flow of the company has led to the lack of 19Q4 promotion and the backlog of inventory. In order to alleviate the report pressure, the company set aside 2.76 billion yuan of inventory impairment loss in 2019, and continued to use the strategy of small profit and quick turnover in 2020. Short-term operation is still under some pressure. 2020Q1-Q3, the company achieved a revenue of 12.98 billion yuan, a drop of 7.1%, and a net profit of 370 million yuan, a drop of 47.2%. But positively, 20Q3 final inventory continued to decline compared with the end of 2019, and 20Q1-Q3 gross profit margin rebounded from the whole of 2019.
The long-term competitiveness remains unchanged, and the business is expected to recover gradually.
With excellent brand building and marketing ability, Cross-Border has built a cost advantage through large-scale selection. Although the deterioration of the business environment to a certain extent exposed the disadvantages of the "hypermarket" model with high inventory and poor anti-risk ability, it is undeniable that the long-term competitiveness of Cross-Border has not been significantly weakened due to short-term fluctuations. Still has a strong brand influence and rich experience in e-commerce operation. With the refinement of operation, the company's revenue and profit are expected to reshape the growth curve.
The bottom has stabilized, waiting for recovery, and the inventory of companies with "overweight" ratings for the first time has returned to around the end of 2016. Although short-term operations are still under some pressure, with excellent operating capacity and significant economies of scale, it is expected to take advantage of the high economy of cross-border export e-commerce to adjust quickly. We estimate that the return net profit of the company from 2020 to 2022 is 3.6,6.1 and 780 million yuan, corresponding to 0.23,0.39,0.50 yuan for EPS. With reference to the comparable company's Wind consensus expectation 22.67xPE in 2021, and considering that the company's R & D strength is relatively weak and the operating risk may be magnified under intensified competition, the company is given a 17x PE in 2021 with a target price of 6.63 yuan, with a "overweight" rating for the first time.
Risk hints: inventory impairment risk, intensified market competition
