The current situation of the company
Recently, we visited and investigated Gao Xin zero and other management and some stores, and conducted in-depth exchanges on the company's recent business operation and new business type. We believe that after BABA has become the controlling shareholder of the company, the online and offline cooperation with Gao Xin is expected to deepen, and is optimistic about the increasing market share of the company with the support of BABA in the medium and long term.
Comment
1. Affected by the high base of the same store caused by the epidemic in the first half of 2020, we expect that the same store of the company may be under short-term pressure in the first half of 2021. During the epidemic in 2020, the trend of online consumption migration is significant, and the company's home-to-home business grows rapidly. The annual B2C performance increased by 80% compared with the same period last year, and the proportion of online business reached more than 20%, leading to a high base in the first half of last year.
With the effective control of the epidemic in China in 2021, the company's online home business has gradually returned to normal. we believe that under the influence of the high base of 1-2Q same-store in 2020, we expect 1-2Q same-store to decline slightly in 2021, starting from 3Q. with the reduction of high base effect and steady growth of arrival business in the same period, the same store of the company is expected to become regular gradually.
2, 2021 is the first year of new business type's investment, small and medium-sized Runfa and community group buying and other new business type is expected to usher in strength.
1) "medium Runfa": focus on fresh, fast consumer and other core categories, the area has been reduced to 3000-5000 square meters, the business model is close to Da Runfa, the number of stores will be 6 by the end of 2020, and the scale expansion is planned in 2021. 2) "Xiao Runfa": fresh day accounts for more than 70%, with an area of about 200-500 km, which provides home service for consumers. the company plans to build a fresh processing center locally to speed up the efficiency of goods turnover. There will be 24 stores by the end of 2020, and the store may be displayed quickly in the future. 3) Community group purchase: in 2021, the company plans to increase investment and adopt the strategy of going hand in hand with Flying Niu Group purchase, in which Post purchase is the exclusive cooperation project between the company and case Bird Post Station. at present, it has carried out cooperation in more than 36 cities and more than 100 stores, the number of active sites is close to 8000, FeiNiu Group purchase covers 125 cities, and there are more than 220 cooperative stores. Considering the layout of the rookie post station and the company's extensive network, the future space of the community group purchase business can be expected.
3. Cooperation with BABA is expected to be further strengthened and optimistic about the medium-and long-term development prospects of the company's new retail. At present, BABA holds 83.37% of the company's shares. Thanks to BABA's support in many aspects, such as flow introduction and logistics services, the company's revenue share and profitability industry is at the top of the industry. In addition, the company and BABA work together to develop community group buying business, and we believe that in the future, the company is expected to further integrate into BABA's ecosystem, and expand cooperation space in inventory sharing, supply chain management and other aspects to achieve synergy and efficiency. Optimistic about the medium-and long-term development prospects of the company's new retail business.
Valuation proposal
Taking into account the company's increased investment in new business type, the net profit in 2021 will be reduced by 20% to 2.08 billion yuan, and the net profit in 2022 will be lowered by 9% to 2.45 billion yuan, corresponding to 28 times Pmax E in 2021, maintaining the industry rating. Due to the revision of the profit forecast, the target price will be lowered by 20% to 9.1 Hong Kong dollars, corresponding to 37 times Ppace E in 2021, which has 34% upside space.
Risk.
Industry competition intensifies; online-to-home growth falls short of expectations; investment in new business exceeds expectations.