1-3Q23 net profit meets our expectations
The company announced its results for the first three quarters of 2023: revenue of 23.56 billion yuan, down 6.2%, and net profit of 340 million yuan (- 190 million yuan in the same period last year), which is basically in line with our expectations. From a quarterly point of view, the revenue of 1Q/2Q/3Q23 is-7.8%, respectively, compared with the same period last year. The revenue of the company is-7.8%, 0.3%, and 9.6%, respectively, and the net profit of returning home is + 36.1%, respectively.
Trend of development
1. In the third quarter, traditional department stores and supermarkets are under pressure, and the growth trend of Olai is bright. Q3 company realized revenue of 7.23 billion yuan, down 9.6%. According to the format, 1) the revenue of department stores, shopping malls and OUTLETS in the third quarter compared with the same period last year was-2.1%, 4.6%, 26.6% and 3.2%, respectively, in line with the current rational consumption trend and achieving faster growth. 2) the revenue of supermarkets and hypermarkets in the third quarter compared with the same period last year were-12.1% and 19.3% respectively. We expect that due to the fierce competition in the market, the number of stores in the quarter increased by 45 net / decreased by 6; the revenue of convenience stores decreased by 1.4% in the third quarter, with a net decrease of 3 stores.
3) the revenue of professional stores increased by 7.7% in the third quarter, with a net increase of 2 stores.
2. The warming of gross profit margin leads to the improvement of profitability and stable cost control. The company's gross profit margin increased by 1.9ppt to 26.4% in the third quarter, mainly due to the recovery of main business operations, department stores, shopping malls, and Olai gross profit margins increased by 3.8/6.4/8.6ppt, respectively, dragging down the gross profit margin of supermarkets. From the expense point of view, during the third quarter, the expense rate was reduced by 0.2ppt to 24.9%, of which the sales expense rate was reduced by 0.1ppt to 17.3%, the management + R & D expense rate was increased by 0.4ppt to 7.6%, and the financial expense rate was reduced to-0.1%. The overall cost control is relatively stable. Under the combined influence, the net interest rate of Q3 increased by 1.2ppt to 0.2%, and the non-net interest rate increased by 1.3ppt to 0.1%.
3, the transformation and upgrading of the main business continues to advance, and the issuance of REITs is expected to invigorate high-quality assets. The company adheres to the development direction of branding, digitization and specialization, and its stores promote the continuous transformation of "one store, one policy". First Yaohan plans to gradually complete the adjustment and opening of cosmetics within this year, and the proportion of famous products will gradually increase. On October 27, Bailian West suburb Shopping Mall opened for trial operation after a year of shop closure and adjustment, and nearly 200 brands have been signed. among them, there are 50 first stores in the whole country, Shanghai and Changning District, and the space moving line is also optimized. In addition, the company's interim shareholders' meeting held on September 22 examined and approved the "proposal on the Application and issuance of Infrastructure REITs Project", which is based on the Shanghai Yicheng Shopping Center project, which we believe is conducive to the revaluation of the company's high-quality assets. Pay attention to the company's business recovery and the progress of transformation and upgrading.
Profit forecast and valuation
Taking into account the intensification of market competition, the 24-year revenue forecast for 2023Universe is lowered by 8% to 31.5 billion yuan, and the company's business transformation measures and the continued promotion of the REITs project are taken into account, leaving the net profit forecast unchanged for the time being. The current share price corresponds to 25 times of 2023 pound, 24-year 31-pound, respectively. Maintain an industry rating that outperforms. Taking into account the change in market risk preference, the target price is reduced by 9% to 13.6 yuan, corresponding to 2023 Universe, which is 33 times the price of 2023 Universe, with 30% upside space.
Risk
The competition in the industry intensifies; the application for duty-free license is uncertain; and the effect of business transformation is not as good as expected.