维持增持。H1营收 89.8亿元/-11.6%，归母净利7.12 亿元/-21.1%，扣非7.05 亿元/-12.9%略低此前预期，下调预测2024-26 年EPS 至2.84/3.07/3.31 元(原2.95/3.27/3.54 元)增速-4.9/8.3/7.9%；给予公司9倍PE，下调目标价至25.56 元，维持增持。Introduction to this report:
The decline in the company's Q2 net profit increased, but actively promoted cost reduction and efficiency, focused on product strength, and laid out fresh food discount stores, and was optimistic that performance would rise steadily.
Key points of investment:
Maintain an increase in holdings. H1's revenue was 8.98 billion yuan/ -11.6%, net profit attributable to mother of 0.712 billion yuan/ -21.1%, slightly lower than previous expectations. The 2024-26 EPS forecast was lowered to 2.84/3.07/3.31 yuan (originally 2.95/3.27/3.54 yuan) growth rate of 4.9/8.3/ 7.9%; the company was given 9 times PE, and the target price was lowered to 25.56 yuan to maintain the increase in holdings.
H1 overview: 1) Q1/2 revenue growth rate in a single quarter - 4.6/ -18.5%, net profit growth rate - 15.1/ -28.9%, after deducting growth rate of -3.6/ -25.1%; H1 net profit decline was higher due to investment income and non-economic decline, fair value income from financial assets (mainly Dengkang) fell 93%, and Q2 depreciation/non-economic growth rate of -3.2%; 2) H1 gross profit margin 26.7% /+0.74pct, of which department stores/supermarkets/electrical/auto trade were 25.75/0.7pct, respectively 4/19.2/ 6.4%, YoY -1.2/-1.2/+0.1/-0.04pct, respectively; net interest rate 7.97% /-1.07pct; 3) expense ratio 19.1% /+0.2pct, sales/management/R&D/finance expense ratios of 14/4.7/0.09/ 0.32%, respectively, +0.75/ -0.07/-0.05/-0.43pct; 4) Net operating cash flow 1.06 billion yuan/ -9.64%; 5) Malaysian Consumer Investment Income 0.332 billion yuan/ -20.5%.
Due to factors such as benefiting from the renewal and replacement of electrical appliances, a positive increase in revenue was recorded, and fresh food discount stores were actively set up.
1) H1 added 3 new stores and closed 10 stores; as of the end of H1, 274 stores, including 50 department stores, 149 supermarkets, 41 electrical appliances, and 34 auto traders; 2) Revenue by sector:
Department stores 1.33 billion yuan/ -6.2%, supermarkets 3.67 billion yuan/ -3.6%, electrical appliances 1.66 billion yuan/ +0.8%, auto trade 2.23 billion yuan/ -28.7%, among which the electronics sector performed brilliantly; 3) H1 restructured 2 supermarkets, and the California store achieved profits in the same month. Untaxed sales increased 36.5% the following month, and gross profit increased by more than 38% over the past few days; sales of the Baihe Road store increased 205% without tax by the end of June, and the number of transactions increased 110 per day %, net gross profit increased by 96.8%.
Reduce costs and increase efficiency, focus on improving commodity power, and expect a steady recovery in performance. 1) Actively promote rent reduction negotiations in stores, and H1 added 0.1 billion yuan in contract relief amount (before tax) and implemented a reduction amount of 36.6 million yuan (before tax); at the same time promote integrated business and financial management and full coverage of organizational optimization, reducing total labor costs and inventory by 0.1 billion yuan year over year; 2) carry out 50 coordinated promotions to ensure stable sales and form the “1st 611 Department Store Festival” and the “12th Home Appliance Festival” two-wheel drive, with a schedule of 6.58 billion yuan; 3) Further promotion Joint business plans, continuous optimization of the supply chain, development of differentiated products, and accelerated integration of business formats; 4) We expect to continue to have a good dividend level in 2024. The current dividend rate exceeds 7%, and PE is only 6 times.
Risk warning: the main business and fresh food discount stores fall short of expectations, the growth of the Malaysian consumer business is slowing down, etc.
