1-3Q23 performance meets our expectations
The company announced 1-3Q23 performance: realized operating income of 5.675 billion yuan, a drop of 0.94% in comparable caliber; net profit of 450 million yuan in return to its mother, a decrease of 11.05% in comparable caliber; and deduction of 394 million yuan in non-net profit, an increase of 9.03% in comparable caliber, which is basically in line with our expectations.
On a quarter-by-quarter basis, Q1/Q2/Q3 revenue is-2.4%, 0.2%, 0.1%, 14.4%, 28.3%, 60.5%, and 114.4%, respectively, from a year-on-year basis.
Trend of development
1. 1-3Q23 revenue is basically flat compared with the same period last year. Affected by the intensification of competition in the industry and other factors, 1-3Q23's revenue is basically flat compared with the same period last year. According to regions and formats, Dalian department stores / supermarkets / electrical appliances are respectively + 3.05%, 12.95%, 45.77%, and Daqing, respectively, + 12.42%, 4.82%, 32.92%. The format of department stores / supermarkets in Mudanjiang area is + 4.33% and 11.90% respectively compared with the same period last year. Due to the warming of offline passenger flow, revenue has recovered in department stores and electrical appliances, while supermarkets are under relative pressure. In terms of the number of stores, 3Q23 had 127 stores at the end of the year, and there were no new or closed stores during the period.
2. The profitability of the main business has picked up somewhat. 1-3Q23's gross profit margin also increased by 1.2ppt to 39.3%. We expect the high gross margin department store business to resume and its revenue share to increase. On the expense side, the sales expense rate fell 0.7ppt to 11.8% compared with the same period last year, and the fee control effect was gradually reflected; the management + R & D expense rate decreased by 0.2ppt to 10.3% compared with the same period last year, and the financial expense rate increased by 0.3ppt to 2.1% compared with the same period last year. Under the combined impact, the company's 1-3Q23 net interest rate fell 0.9ppt to 7.9% year-on-year, deducting non-net interest rate increased 0.6ppt to 6.9% year-on-year, non-recurrent items are mainly income from closed-shop disposal of right-to-use assets, and overall profitability of the main business has picked up.
3. Pay attention to the progress of the company's management optimization. During the period, the company responded positively to the call to boost consumption, coordinated efforts on characteristic node activities such as "Red May" and "Mid-year Celebration", and reached strategic cooperation with Culture and Travel Group to achieve resource sharing and complementary flow. In terms of store management, the company continues to increase the proportion of food, driving the brand magnitude and flat efficiency to improve, and continue to promote the store "adjustment and increase". The follow-up company plans to continuously optimize its operation by strengthening brand dynamic management, improving single-cabinet profitability, and strengthening gross profit management of superior categories.
Profit forecast and valuation
As the competition in the industry continues to intensify and the company's main business is under pressure, we have lowered the company's 2023max 2024 profit forecast by 8% to 587 million RMB 638 million, and the current share price corresponds to the 2023max 9max 2024 8x Pmax E.
Maintain the outperform industry rating, and lower the target price by 9% to 20 yuan based on earnings forecasts, corresponding to 2023 Universe 10 times Pmax E in 2024, which has 18% upside space compared with the current stock price.
Risk
Industry competition intensifies; consumption continues to be weak.