Introduction to this report:
The company actively adjusted its internal operating structure, continuously reduced costs and increased efficiency. Expenses fell sharply during the period and gross profit increased markedly. Combined with its own brands and an increase in the share of online business, the company is expected to rise steadily. Key investment points:
Maintain an increase in holdings. Taking into account appropriate adjustments to the speed of opening stores, the 23/24/25 EPS was lowered to 0.03/0.06/0.10 yuan (previous value was 0.06/0.09/0.15 yuan). Give the industry average valuation of 0.49xPS in 2023, maintain the target price of 4.8 yuan, and maintain the increase in holdings.
Performance summary: Performance fell short of expectations. 23H1 achieved operating income of 42,027 billion yuan, down 13.76% from last year; net profit attributable to mother was 374 million yuan, turning losses into profit; deducting non-return net profit of 993.34 million yuan, up 5.56% year on year; Q2 main revenue was 18.225 billion yuan, down 15.18% year on year; net profit of returned mother was 330 million yuan, net profit not reduced by 519 million yuan. Losses decreased by 46.18% and 2.84% respectively compared with the previous year.
Store adjustments reduce costs and increase efficiency, return traffic to normal, and increase gross profit. Faced with insufficient consumer confidence, the company actively adjusted its internal operating structure, eliminated long-term losses, continuously improved operating efficiency, and achieved cost reduction and efficiency through assessment and promotion. Expenses for various periods were reduced by 642 million yuan compared to the same period last year, and since April, the company's passenger flow has recovered, and the comprehensive gross margin has increased to 21.99%. It has achieved a year-on-year increase of 486 million in net profit due to a decline in operating income.
The share of online products continues to increase, and the gross profit margin of goods is the highest in nearly 3 years. In the first half of 2023, online business revenue was 7.92 billion yuan, up 4.4% year on year, accounting for 18.7% of omni-channel main revenue; gross product margin was the highest in nearly 3 years, thanks to optimized category structure and improved supply chain efficiency.
During the reporting period, “Yonghui Life”'s self-operated door-to-home business covered 946 stores. As of August 2023, the company had launched a total of 940 e-commerce warehouses.
Risk warning: The macroeconomic economy is declining, consumer confidence is insufficient; store expansion falls short of expectations.