1、百货业务下滑明显，免税业务稳步成长。公司1H24 营收同降5.4%，剔除新店因素后同店同比下降7.3%。1）从客单客流角度，整体客流同比小幅提升，其中购物中心较为突出，客单Q1 同比小幅上升但Q2 同比下降。2）分业态看，百货/购物中心/奥莱/专业店/免税营收分别同比-13.7%/+0.01%/+0.2%/-3.1%/+121.2%至23.19/15.42/11.40/7.58/1.72 亿元，受消费结构向体验消费+性价比消费转变的影响，购物中心、奥莱表现相对稳定，百货及专业店相对承压，免税则是处于成长期。截至报告期末，公司在全国运营78 家大型综合零售门店，数量与去年底持平，其中百货/购物中心/奥特莱斯/免税各29/31/17/1 家。展店方面，贵阳CCPARK 购物中心、苏州王府井购物中心、临汾王府井购物中心、拉萨王府井购物中心预计年内开业。1H24 results fall short of our expectations
1H24 achieved revenue of 6.035 billion yuan, a decrease of 5.4%, and net profit due to mother of 0.293 billion yuan, a decrease of 43.4%, lower than our expectations. We believe that the main reason was overall consumption pressure and competition intensified, and pressure on the company's customer unit price and profit margin was high. After deducting non-net profit of 0.32 billion yuan, the same decrease was 30.1%. On a quarterly basis, Q1/Q2 revenue decreased by 1.7%/9.5%, respectively, and net profit to mother decreased by 10.9%/68.6%, respectively.
Development trends
1. The department store business declined significantly, and the duty-free business grew steadily. The company's 1H24 revenue fell 5.4%. Excluding the new store factor, the same store declined 7.3% year over year. 1) From the perspective of customer single passenger flow, overall passenger flow increased slightly year over year. Among them, shopping malls were prominent. Customer order Q1 increased slightly year over year but Q2 fell year on year. 2) By business type, department store/shopping center/olai/specialty store/duty-free revenue was -13.7%/+0.01%/-3.1%/+121.2% to 23.19/15.42/1.14/0.758/0.172 billion yuan, respectively. Influenced by the shift in consumption structure to experiential consumption+cost-effective consumption, the performance of shopping malls and Ole stores is relatively stable. Department stores and specialty stores are under relative pressure. Duty free is in a period of growth. As of the end of the reporting period, the company operated 78 large-scale integrated retail stores nationwide, the same number as at the end of last year, including 29/31/17/1 department stores/shopping centers/outlets/duty-free shops. In terms of exhibition stores, Guiyang CCPARK Shopping Center, Suzhou Wangfujing Shopping Center, Linfen Wangfujing Shopping Center, and Lhasa Wangfujing Shopping Center are expected to open within the year.
2. Profitability is under pressure. The gross margin of the 1H24 company fell by 1.0ppt to 40.9%. Among them, the gross margin of the department store/shopping center/Ole business decreased by 0.8/3.5/2.2ppt, respectively. We think it may be mainly due to overall consumption pressure and the company's increased promotion efforts. On the cost side, the sales expense ratio also increased by 0.4 ppt to 13.8%, and the management fee ratio also increased by 1.3 ppt to 13.6%. There was an impact of incorrect payment of year-end bonuses and increased labor costs for newly opened stores. Under the combined influence, net interest rate to mother decreased by 3.3 ppt to 4.9%, and after deducting non-net interest rate, it also decreased by 1.9 ppt to 5.3%.
3. Follow the progress of the layout of duty-free shops in the city. Recently, the Ministry of Finance, the Ministry of Commerce, the Ministry of Culture and Tourism, the General Administration of Customs, and the State Administration of Taxation issued the “Notice on Improving the Duty-free Shop Policy in the City”, which clearly regulates the management of duty-free shops in the city in accordance with the “Interim Measures on the Administration of Duty Free Shops in the City” from October 1, which applies to China Free's 6 existing duty-free shops in the city. In addition, 1 local duty-free shop will be set up in each of the 8 cities of Guangzhou and Chengdu. We believe that the company has nationwide duty-free business qualifications and has an advantage in the taxable store layout. It is expected that in the future, it will successfully bid for the right to operate duty-free stores in the city, opening up room for growth.
Profit forecasting and valuation
Considering the overall pressure on the consumer environment, we lowered our 24/25 profit forecast by 16%/17% to 0.676/0.737 billion yuan. The current stock price corresponds to 21/19 times P/E for 24/25. Maintaining an outperforming industry rating, the target price was lowered by 16% to 16 yuan based on profit forecast adjustments, corresponding to 27/25 times P/E in 24/25, with 30% upside compared to the present.
risks
Industry competition continues to intensify; duty-free business expansion falls short of expectations; merger and acquisition integration falls short of expectations.
