Core ideas:
Full-year results were under pressure and fourth-quarter losses narrowed. The company released the 2020 annual report, achieving total revenue of 15.736 billion yuan, down 20.23% from the same period last year; net profit of 112 million yuan, down 35.35% from the same period last year; and net profit of 85 million yuan, down 27.85% from the same period last year. In the fourth quarter alone, the company achieved revenue of 3.482 billion yuan, down 28.38% from the same period last year; realized net profit of-58 million yuan (- 63 million yuan in the same period last year), and deducted non-return net profit of-52 million yuan (- 98 million yuan in the same period last year).
The expense rate has increased and the operating cash flow has declined. According to the annual report, the comprehensive gross profit margin in 2020 was 30.14%, up 6.03 ppm from the same period last year, mainly due to the impact of the new accounting standards. The sales / management expense rates are 24.00% and 2.28% respectively, and the year-on-year changes are + 5.12pp/+0.37pp respectively. The operating cash flow in 2020 was 1.349 billion yuan, down 23.49% from the same period last year, mainly due to the difference in settlement time between suppliers and the cash flow of merged enterprises. By the end of 2020, the company had 420 stores of various formats (369 supermarkets and 51 department stores). The profit of supermarket comparable stores was + 27.36% compared with the same period last year, and the profit of department stores was-21.20% compared with the same period last year.
Explore the full closed loop of digital transformation and create a new engine of business growth. According to the annual report, (1) by the end of 2020, the number of digital members will be 24.7 million, and the net new customers in 2020 will be 7.36 million, with a mobile sales rate of 78%. Sales of digital members increased by 16.7% in 2020. (2) in terms of home-to-home business, in 2020, the company had 357 Mini Program stores, 331 code-scanning stores and 357 stores. (3) online GMV for the whole year is about 6.3 billion yuan, compared with 2.33 billion yuan in the same period last year.
Profit forecast and investment advice. As the leading retailer in southwest China, the company has a flexible combination of supermarkets and department stores, and the digital transformation has achieved initial results. It is estimated that the company's net profit from 2021 to 2023 will be 1.57 billion yuan respectively. With reference to the comparable company valuation, it will give a valuation of about 45X PE for 21 years, with a corresponding reasonable value of 7.72 yuan per share, maintaining the "overweight" rating.
Risk tips. The macro consumption is in the doldrums; the national supermarket leader has entered the Hunan market; the growth rate of the arrival business is not as expected; and the operation effect of the Jingteng cooperation project is not as expected.
