Description of the event
The company disclosed the three-quarter report: In the third quarter of 2023, the company achieved operating income of 3.02 billion yuan, a year-on-year increase of 1%, attributable net profit of 9.93 million yuan, a year-on-year increase of 121.81%, and realized net attributable losses of 17.49 million yuan, an increase of 79% over the previous year.
Incident comments
In the third quarter alone, there was a restorative increase in the company's purchases of 100, and the supermarket stage was under pressure. Operating profit was still lost, but the asset disposal income confirmed by the closing of the store went back to the parent's net profit. Looking at the third quarter alone, the company's Q1/Q2/Q3 revenue changed -2.2%/2.8%/0.96% respectively, and the Q3 growth rate slowed slightly month-on-month; by business format breakdown, supermarket business: Q1/Q2/Q3 revenue changed -2%/-3%/-2% year over year. The decline in supermarket revenue in the single third quarter narrowed but still declined. It is expected that under the high base of stocking demand in the same period last year, customer unit prices have declined somewhat; purchasing business: Q1/Q2/Q3 revenue fluctuated slightly/1%/10% year over year, maintained a double position of 17%/The number resumed growth; in terms of opening stores, Q3 opened 1 new company Supermarkets stopped operating 2 and bought 100. On the gross profit side, the company's gross margin increased by 0.31 percentage points in the third quarter. Considering that the gross margin of comparable stores and supermarkets fell 0.6 percentage points year on year, the gross margin of the 100 purchase business is expected to rise to some extent; on the cost side, the company's sales expense ratio increased 0.6 percentage points year on year, management expense ratio increased 0.2 percentage points year on year, R&D expenses increased 0.1 percentage points year on year, and financial expenses fell 0.8 percentage points year on year, and overall cost ratio remained stable. In total, the operating loss of 2023Q3 company (gross profit, taxes, sales expenses - R&D expenses - management expenses - finance) was 91.06 million yuan, a slight decrease from last year. There is still room for improvement in profit-side recovery. Furthermore, due to asset disposal income of company owners due to store closures in the single third quarter, the company achieved net profit of 9.93 million yuan, an improvement of 55.46 million yuan over the previous year.
During the reporting period, breakthroughs were achieved in the exposure and sales of the company's public traffic platforms, and strategic core products continued to be strengthened. In the single third quarter, the company's main business highlights were: 1) The company achieved a breakthrough in traffic and sales of public domain traffic platforms: in the single third quarter, the company's exposure on Douyin reached 351 million, an increase of 116% over the previous year; ticket sales achieved a GMV of 110 million yuan, an increase of 405% over the previous year; and sales of vouchers in Meituan achieved a GMV of 259 million yuan. 2) Continued development of strategic core product groups: sales of the company's major single products increased 40% year on year in the third quarter, with sales of durian doubling year on year, with cumulative sales exceeding 100 million yuan; private brand products continued to innovate and break through market trends, and sales increased 11% year on year. Among them, sales in the snack food category increased by more than 44% in the first 45 days of the Mid-Autumn Festival; 3R further promoted the integration of the national supply chain and developed its own brand pre-made dishes during the Mid-Autumn Festival. Sales increased 13% year on year; international direct procurement sales increased 13% year on year; international direct sales increased year on year.
Investment suggestions: Overall, the company grasps the opportunity of consumer recovery to promote the restorative growth of 100 purchases, actively adjusts and optimizes retail stores. Focusing on high-quality supply chains is expected to improve endogenous management efficiency, and carrying out digital transformation and omnichannel strategies is expected to open up room for incremental growth for the company. The estimated net profit attributable to 2023-2025 is 2.69, 3.01 and 411 million yuan, and the company's PE valuation is 23, 21, and 15 times, maintaining the “buy” rating.
Risk warning
1. Consumption recovery or fluctuations;
2. The cultivation of new stores fell short of expectations.