Event description

The company disclosed semi-annual report: in the first half of 2023, the company realized operating income of 6.312 billion yuan, an increase of 1.16% over the same period last year, realized net profit of 11.6092 million yuan, improved by 51.272 million yuan, and deducted non-net profit of 5.5887 million yuan, an improvement of 5960.48 yuan over the same period last year.

Event comment

In the first half of the year, revenue remained stable, gross profit margin increased slightly, and comprehensive operating profit significantly reduced losses. The company's revenue in the first half of the year increased by 1.16% compared with the same period last year, including 0.82% for supermarket business, 0.32% for department stores and 21.78% for other businesses. Same store dimension, shopping mall and comprehensive super: Hubei, Chongqing, community supermarkets, convenience stores, department stores and electrical stores decreased by 1.49%, 19.64%, 1.92%, 4.42%, 4.91% and 9.68%, respectively. Dimension of opening stores, hypermarkets and comprehensive supermarkets: 0 net increase in Hubei, 1 net increase in Chongqing, 13 net increase in community supermarkets, convenience stores: 21 net increase in Hubei, 2 net increase in Hunan, and 2 closure of department stores. From this, we can see that the decline in supermarket business income is mainly caused by the decline of the same store, while the decline of department store business income is mainly caused by the closure of stores. From the quarterly perspective, Q1 and Q2 revenue increased by 1.94% and 0.21% respectively over the same period last year, and the gross profit margin changed by 0% and 0.27% respectively over the same period last year, mainly due to the increase in the gross profit margin of the supermarket business, or mainly due to the continuous optimization of the company's supply chain. Gradually increasing the proportion of source procurement makes procurement costs optimized. On the expense side, the sales expense rate in the first half of the year decreased by 0.66% compared with the same period last year, of which the Q2 sales expense rate decreased by 1.56% compared with the same period last year, or mainly due to the decrease in the salary of the company's employees, and the management expense rate increased by 0.21% in the first half compared with the same period last year. Among them, Q2 increased by 0.4 percentage point, or mainly due to an increase in the salary of managers and staff. Comprehensively make the company's operating profit in the second quarter (gross profit-business tax-sales expenses-management expenses-financial expenses-R & D expenses) to-795600 yuan, reducing the loss by about 44.4679 million yuan compared with the same period last year.

During the reporting period, the company accelerated the reform, transformation and adjustment, and actively sought business increment to open up new growth momentum. The company actively promotes the transformation and upgrading of the business format, experimenting with 1 discount store of "small hundred Food Shop", developing 20 "Zhongbai Qianshuang" light food restaurant, building the brand of "Zhongbai Qianshuang" low-fat and healthy food, stepping into the new track of healthy food and prepared food industry, initially establishing Zhongbai supermarket joining system and expanding 8 franchise stores. Actively explore the community canteen service model, to benefit the people service supporting construction standards, to create the first market-oriented operation of the "happy canteen". On this basis, the company actively expanded its business increment. In the first half of the year, the company's sales increased by 34.46% compared with the same period last year; optimized business development strategy, strengthened the core competence building of logistics tripartite business operation, and realized tripartite business income growth of 222.53% over the same period last year; strengthen tripartite online platform cooperation with Meituan, ele.me, JD.com and other tripartite online platforms, increase resource investment and traffic introduction, and develop online business increment.

Investment advice: with the steady progress of supply chain optimization, convenience stores and other new business type trend, the first half of the year to achieve revenue stability, profit improvement of a good trend, in the medium to long term, the company actively promote digital transformation and supply chain optimization to achieve retail endogenous efficiency optimization, the follow-up incremental space and profit continuous repair is worth looking forward to It is estimated that the earnings per share will be 0.06,0.07,0.11 yuan per share respectively from 2023 to 2025, while the company will maintain a "buy" rating corresponding to the PS valuation of only 0.25 times in 2023.

Risk hint

1, the acceleration of new entrants to the regional market further intensifies the competition; 2, the company new business type layout management effect cash speed is slow.