Core views:
Incident: Suning Tesco announced that the company's controlling shareholder and actual controller, Mr. Zhang Dongdong, and his co-actor, Suning Holding Group, and its co-actor, Suning Electric Group and Tibet Trust, plan to transfer the total number of shares held by the company accounting for 23% of the total share capital of the listed company to Shenzhen International, Kunpeng Capital or its designated investors (Shenzhen International and Kunpeng Capital Management are all Shenzhen State-owned Assets Administration Commission); the transfer price is 6.92 yuan/share. After the transaction is completed, the shareholding ratio of Mr. Zhang Dongdong, the original controlling shareholder and actual controller of the listed company, and Suning Holding Group, and his co-actor, Suning Electric Group, is 5.45%, Taobao (China) Software's shareholding ratio is 19.99%, Kunpeng Capital's shareholding ratio is 15%, and Shenzhen International's shareholding ratio is 8%; the listed company will have no controlling shareholder and no actual controller.
Management remains stable, and the strategy continues to focus on the main retail business. According to the announcement, Shenzhen International and Kunpeng Capital will actively promote the standardization of corporate governance and maintain the stability of the core management team.
It is expected that the strategy focusing on the main retail industry and the specific implementation plan for various adjustments will remain unchanged.
Optimize the financial structure and promote industrial collaboration. According to the announcement, (1) Suning and Shenzhen International will cooperate in logistics; (2) Shenzhen International, Kunpeng Capital and other relevant parties will provide the company with necessary policy, taxation, financial, etc. support in various business areas; and (3) the company will establish a South China regional headquarters in Shenzhen to enhance brand awareness and market share in South China.
We believe that this transaction will help Suning optimize its capital structure and enhance its ability to repay debts. At the same time, it will help Suning continue to focus on its main retail business and concentrate resources on supply chain and logistics construction. Suning's omni-channel retail layout and accumulated more than 600 million registered members have provided time and space for the company to adjust itself. Suning is expected to earn 2585/3138/361.2 billion yuan in 20-22, an increase of -4.0%/21.4%/15.1% over the previous year, and the net profit of the mother is estimated to be 39/-4/8 billion yuan. Considering that the time required for the company to resume operations will be lengthened, the valuation was lowered to 0.35X PS in 2021, corresponding to a reasonable value of 11.80 yuan/share, maintaining the “buy” rating.
Risk warning: The implementation of marketing strategies did not meet expectations; the recovery in home appliance consumption fell short of expectations; and the recovery speed of offline stores fell short of expectations.