Incident; According to the official account of Henan Yonghui Supermarket, the Zhengzhou Yonghui Xinwan Plaza store will be the first Yonghui supermarket to be restructured with the help of Fat Donglai. It will completely close its stores and resume business on June 19. The details of the changes are as follows:

① Product aspect: Safeguard people's livelihood needs, supplement product functions, preserve first-line brands, select products with characteristics and reliable quality, eliminate products with unguaranteed quality, and plan to supplement fashion product categories.

② Price aspect: Optimize procurement channels, filter product prices, ensure actual product pricing, and ensure reasonable profits.

③ Environmental aspects: Change the layout of the store, no longer force traffic, and provide a safe, convenient, and comfortable shopping environment.

④ Employee side: Raise employees' wages, reduce working hours, and increase benefits such as vacations.

⑤ Business hours: Changed to 9:30-21:30

Previously, Fat Donglai had already initiated support and regulation for supermarkets such as Backgammon and Capella, with remarkable results. Take the Bubugao Changsha Meixi Lake supermarket as an example. Since the restructuring began in early April, Fat Donglai has made comprehensive adjustments in terms of store layout, product structure, quality and price, environment, and personnel service.

The Meixi Lake supermarket store originally sold around 150,000 yuan per day, with an average daily traffic of 2,000 people. By the end of April, daily sales peaked at 1.4 million yuan, and the number of visitors to the store exceeded 15,000. During the May 1st period, Meixi Lake supermarket sold a total of 10.53 million yuan over five days, with an average daily sales of over 2.1 million yuan, and an average daily passenger flow of 15,963 people.

We believe that Fat Donglai's support for Yonghui stores has three main aspects of significance:

① Bringing the impetus from the outside to drastic changes to the store, the product, flow line, pattern, and employee treatment were adjusted to a better state at once at the store level.

② Introducing Fat Donglai's more popular products will bring in direct customer traffic.

③ Using the Fat Donglai Remediation Incident to promote in local social media, it is expected to attract more offline visitors to experience the effects of the correction and gradually reshape consumer perceptions.

Profit forecast and valuation: In the past 3 years, under the impact of many factors such as new retail sales and the epidemic, Yonghui Supermarket faced large losses. After internal adjustments in 2023, the company's losses have narrowed significantly. The introduction of Fat Donglai as an external aid is expected to further enhance the company's profitability and achieve break-even profit. Overall, the company's net profit to mother is estimated to be 50 million/230 million yuan from 2024-2025, maintaining the “recommended” rating.

Risk warning: store adjustments fall short of expectations, loss reduction falls short of expectations, consumption recovery falls short of expectations