Event
According to the company's semi-annual report for 2022, the company achieved a total operating income of 30.524 billion yuan (- 15.5%) and a total profit of 128 million yuan (- 51.4%) in the first half of 2022. The net profit attributed to the parent company was 135 million yuan (- 47.5%), ROE1.56%, a decrease of 2.65pct compared with the same period last year.
Comment
The epidemic factors put pressure on the performance in the first half of the year, but the elastic recovery after the epidemic is expected. The company's performance in the first half of the year was lower than expected: 1H22's revenue was 30.524 billion yuan (- 15.5%) and net profit was 135 million yuan (- 47.5%), of which 2Q22 revenue was 16.43 billion yuan (- 5.7%) and net profit was 78 million yuan (- 49.4%). This was mainly due to the spread of epidemics in Shenzhen, Shanghai, Beijing and other core areas in the first half of the year, which adversely affected the development of the company's main business. In terms of gross profit margin, 1H22 gross profit margin is 6.59%, of which 2Q22 gross profit margin is 6.35%, which is higher than that of the same period last year. We think it is related to the improvement of the company's business structure in recent years and the increase in the category of high-margin products. In the short term, the company's performance is under great pressure by the disturbance of the epidemic, but in the medium and long term we are still optimistic about the recovery of the company's operation and the improvement of profits after the epidemic.
From 1 to N, continue to expand high-margin business. From a sub-industry point of view, the company's 1H22 distribution + marketing business achieved revenue of 27.475 billion yuan, down 19.3% from the same period last year, while revenue from brand operation business reached 1.533 billion yuan, down 5.8% from the same period last year. Compared with the distribution + marketing business, the brand operation business shows better resilience under the disturbance of the epidemic, in which IT/ communications, textile and clothing, mother and child and other segments are still in a positive growth trend. In addition, based on years of good layout of logistics, warehousing and sales channel network system, as well as profound experience in supply chain services, the company also made a positive attempt in the supply chain field of high-tech, new energy and other strategic emerging industries this year to keep up with market demand, continue to explore and develop high value-added and high gross margin business opportunities, and broaden the growth space.
Self-owned brands such as liquor continue to make efforts and have sufficient stamina for growth. Relying on the advantages of brand operation, the company is gaining momentum in the building and construction of its own brand. In particular, the company focuses on creating its own brand "Datang Secret manufacture" in the field of soy sauce and wine, with a total revenue of 27.2724 million yuan in the first half of 22 years. Moreover, because the company has the base brewery resources of the upstream Datang wine industry, in the future, it will have more initiative on the brand and price formulation, and further make huge profits. With the initial success in Datang Secret Building, the company is also gradually building its own brand in home appliances, food and daily chemical sectors. we believe that the company is expected to open multiple growth curves in the future, and both growth and profitability are worth looking forward to.
Main profit forecasts and assumptions: considering that the company's 22H1 performance is lower than expected, we appropriately downgrade our previous profit forecast for 2022-2024. The estimated net return profit for 2022-2024 is RMB 4.97 million and EPS is 0.19 and 0.27 respectively. Considering the resilience of the company's performance recovery after the epidemic and the profitability of continuous improvement, we maintain the target price of 8.10 yuan. Corresponding to 30 times PE after dilution in 2023, maintaining a "better than the market" rating.
Risk tips: the recovery of the epidemic is not as expected, business development is not as expected, and financial pressure
