The company's revenue for the first three quarters of 2023 was -12.4% year-on-year, and net profit was reversed year over year to profit. The company released three quarterly reports: 2023Q1-Q3 achieved revenue of 62,088 billion yuan (-12.4%), net profit of 52 million yuan (-887 million yuan in the same period in 2022), and net profit of 20.061 billion yuan (-9.5%), net profit of 321 million yuan (year-on-year decrease of 453 million yuan). 2023Q3 We believe that the company strives to accelerate the pace of transformation, deeply cultivate supply chain construction+build a technology center to drive performance development, and further build barriers to competition in fresh products, and hopefully cross the inflection point and start again. We maintain our previous profit forecast unchanged. We expect the company's net profit from 2023-2025 to be 0.52/482/9.00 billion yuan, corresponding to EPS of 0.01/0.05/0.10 yuan, and the current stock price corresponding to PE of 539.0/58.2/31.2 times, maintaining the “buy” rating.
The company's main business revenue was under pressure in the first three quarters. Gross margin continued to improve. Looking at the company's main revenue by region, in Q1-Q3, Southeast China/North China/East China/West China/Southwest China/South China/Central China achieved revenue of 98.93/61.15/135.87/114.02/93.63/26.74/4.7.63 billion yuan, a year-on-year difference of -9.1%/-14.4%/-11.1%/-17.4%/-17.4%/-9.4%/-13.4%/-13.0%. Revenue pressure is mainly a consumer choice. Diversification continues to improve, and the competitive environment is still very severe. On the other hand, this is due to the company taking the initiative to optimize stores. The number of stores decreased compared to the same period in 2022. In terms of profitability, 2023Q3 achieved a comprehensive gross profit margin of 20.9% (+1.8pct), which continued to improve; in terms of period expenses, the 2023Q3 sales/management/financial expenses ratio was 19.1%/2.4%/1.7%, respectively, and +0.7 pct/+0pct/-0.1 pct over the previous year.
The launch of “genuine discount stores” to explore discount transformation, and the online business layout is steadily advancing 2023Q3. The company continues to actively optimize stores, opening 1 new store and 6 new contract stores; at the same time, it plans to add “genuine discount stores” to stores nationwide, and simultaneously add discount zones to online apps/applets to provide surprising discount prices for food and goods. On the one hand, this move caters to the rational consumption concept of consumers in the post-pandemic era, and on the other hand, it is also an important attempt to improve operational efficiency. In terms of online business, 2023Q1-Q3 achieved revenue of 12.26 billion yuan (+5.7%), accounting for 19.75% of main revenue; among them, “Yonghui Life”'s self-operated home-based business covered 930 stores, achieved sales volume of 6.38 billion yuan, average daily order volume of 311,000 orders, and an average monthly repurchase rate of 49.8%; third-party platform home-based business covered 908 stores, and sales also increased steadily.
Risk warning: Market competition is fierce; the development of new business formats falls short of expectations; same-store growth is slowing down.