The company released its semi-annual report for 2023. 1H23 realized income of 42.027 billion yuan, down 13.76% from the same period last year; net profit from its mother was 374 million yuan, reversing losses from the same period last year; and deducting 99.33 million yuan from non-net profit, an increase of 5.56% over the same period last year. Diluted EPS 0.04 yuan, return on net assets 4.92%, net operating cash flow 2.587 billion yuan, down 39.99% from the same period last year.
Brief comments and investment suggestions.
1. 1H23 revenue is 42.027 billion yuan, down 13.76% from the same period last year. On the one hand, affected by the lack of consumer confidence and consumption degradation; on the other hand, the company took the initiative to optimize stores, eliminated long-term loss stores, cautiously opened new stores, and the overall number of stores decreased compared with the same period last year. Of this total, 2Q's revenue was 18.225 billion yuan, down 15.18% from the same period last year.
Sub-products: 1H23 fresh and processing income 17.091 billion yuan, down 18.24% from the same period last year; food products (including clothing) income 21.965 billion yuan, down 10.1% year-on-year, accounting for 43.8% and 56.2% of the main income respectively.
Slow down and adjust the speed of opening a shop. 1H23 opened 4 new stores and closed 29 stores, with a total of 1008 stores at the end of the term and 105 reserve stores with a reserve area of 8179,000 square meters.
2. 1H23 gross profit margin 21.99%, an increase of 1.64pct over the same period last year. The gross profit margin of fresh and processing products was 13.22%, an increase of 0.55 pct over the same period last year; and the gross profit margin of food products was 19.09%, an increase of 2.46pct over the same period last year. In sub-regions, 1H23's gross profit margin decreased by 0.98 PCT in South China, but increased in Southeast, North, East, West, Southwest and Central China, with year-on-year increases of 2.22,1.60,0.44,3.40,1.80 and 1.64pct respectively.
3. The expense rate during 1H23 is 21.62%, an increase of 1.66pct compared with the same period last year. Among them, the sales expense rate was 17.29%, an increase of 1.23pct over the same period last year; the management expense rate was 2.25%, an increase of 0.41 PCT over the same period last year; the financial expense rate was 1.59%, an increase of 0.02pct over the same period last year; and the R & D expense rate was 0.49%, a decrease of 0.01pct over the same period last year.
4. 1H23's home net profit of 374 million yuan turned around compared with the same period last year, focusing on reducing investment in the main business. The net income of 1H23 investment was 122 million yuan, a decrease of 4.1 million yuan compared with the same period last year; the loss of fair value change was 21.01 million yuan, reduced by 534 million yuan over the same period last year, the profit and loss on asset disposal was 173 million yuan, an increase of 26.65 million yuan over the same period last year, the effective tax rate was 35.79%, the minority shareholders' equity was-5143 yuan, and the final return net profit was 374 million yuan over the same period last year. 1H23 deducts non-return net profit of 99.33 million yuan, of which 2Q deducts non-return net profit of-519 million yuan. 1H23 focuses on the main business, reducing its 0.08 per cent stake in Zhongbai Group, and will continue to shrink the scale of outbound investment.
5. The online income of 1H23 is 7.92 billion yuan, an increase of 4.4% over the same period last year, accounting for 18.7% of the main revenue of the whole channel. The gross profit margin of commodities is the highest in the past three years, thanks to the optimization of category structure and the improvement of supply chain efficiency. Yonghui Life
The self-operated business has covered 946 stores, with sales of 4.06 billion yuan, with an average daily volume of 295,000, and a monthly average repurchase rate of 48.9%. The third-party platform-to-home business has covered 922 stores, with sales of 3.86 billion yuan, an increase of 10.9% over the same period last year, with an average daily volume of 197,000. As of August 2023, the company had a total of 940 online e-commerce warehouses, including 135 basic warehouses (covering 15 cities), 131 high-standard half warehouses (covering 33 cities), 652 stores (covering 181 cities) and 22 satellite warehouses (covering Chongqing, Fuzhou and Beijing).
6. Own brand to strengthen popular style building and source supply chain construction. The sales of 1H23's own brand reached 1.95 billion yuan, accounting for 4.64%, an increase of 15.2% over the same period last year, and the online share reached 22.5%. Fresh continues to create "taste the source fresh" brand positioning, at the same time accelerate the launch of Huima home "Huijia", "Huifeast" series of prefabricated dishes. In accordance with the six Sunshine supply chain guidelines, in the first half of the year, more than 60 source suppliers with planting bases and innovative R & D were introduced into the private brand supply chain, including 34 strategic cooperation suppliers and 13 order planting and production line underwriting suppliers.
Maintain judgment of the company. We believe that the company's gross profit margin has improved significantly since 2022, and it is recommended to pay attention to the same-store trend and profit recovery flexibility under cost reduction and efficiency increase. ① store optimization: through selection + optimization of high-quality store property, elimination and closure of some rear stores, the company opens an iterative era of stores to slow down the opening speed, but improve the quality of stores; ② strengthens the fresh supply chain: vertical management of fresh plate, using long and short radius mechanism, building fresh own platform "Fuping supply chain" to improve the penetration of source direct collection; food products strengthen cooperation with brands. ③ to build a digital platform: complete the full launch of the YHDOS system in 2022 to improve the efficiency of the whole process digital operation.
Update the profit forecast. It is estimated that the net profit from 2023 to 2025 is 266 million yuan, 685 million yuan and 968 million yuan respectively, an increase of 109.6%, 157.8% and 41.4% over the same period last year. The current market capitalization corresponds to 0.34 times, 0.33 times and 0.31 times of PS from 2023 to 2025. Considering that the company's net interest rate is still in the early stage of repair, we maintain the valuation method of PS, which is 0.4-0.5 times PS in 2023, corresponding to a reasonable market capitalization range of 34.8 billion-43.5 billion yuan and a reasonable value range of 3.84-4.80 yuan, maintaining an investment rating of "better than the market".
Risk hint. The uncertainty of online business, the intensification of industry competition, the uncertainty of investment income and impairment loss, etc.