The results in the first quarter of 2021 are in line with market expectations.
Hefei Department Store announced its results for the first quarter of 2021: revenue was 1.902 billion yuan, up 9.0% over the same period last year; net profit from home was 108 million yuan, up 80.3% from the same period last year, corresponding to 0.14 yuan per share, which was in line with the previous performance forecast range; net profit after deducting non-recurring profit and loss was 81 million yuan, an increase of 110.5% over the same period last year. The company's 1Q21 revenue growth rate has returned to positive, and profitability has improved.
Development trend
1. Income growth resumed, and Q1 achieved the same increase of 9.0%. With the gradual elimination of the impact of the epidemic, the company's management improved quarter by quarter, superimposed low base effect, Q1 year-on-year growth rate returned to positive for the first time since last year. In terms of different formats: 1 the format of department stores and home appliances: we expect the rebound of offline passenger flow and the pick-up of terminal demand to improve the operation of department stores / home appliances; 2 the format of supermarkets: we expect to be affected by a high base. Q1 and the first half of the year pressure; 3 Agricultural products transactions: the company continues to promote the investment and landing of agricultural products market projects, we expect the circulation business of agricultural products to remain sound.
2. Profitability has been improved, and the deduction of non-net interest rate has been revised to 4.3%. The company Q1 achieved a gross profit margin of 31.2%, an increase in 2.3ppt compared with the same period last year. During the period, the expense rate decreased by 0.9 ppt compared with the same period last year, the sales expense rate decreased by 0.9ppt to 6.4%, the management expense rate decreased by 0.6ppt to 13.9%, and the financial expense rate increased by 0.7ppt to 1.2% compared with the same period last year, mainly due to the increase in interest charges after the implementation of the new lease standards. Taken together, the Q1 net interest rate rose to 5.7 per cent year-on-year, while the net interest rate after deducting non-profit rose 2.1ppt to 4.3 per cent year-on-year.
3. Continue to pay attention to the effectiveness of business transformation measures. At the present stage, the company promotes the strategic transformation of "double main business plus": 1 main business adjustment: Department stores promote the optimization and upgrading of product structure, consolidate superior categories and introduce new brands, and at the same time use innovative marketing activities to enhance accurate operation and optimize customer group structure; agricultural products business to carry out multi-channel investment, promote the construction of logistics parks and cold storage projects, and enhance the capacity of the supply chain. (2) format coordination: carry out all-format linkage marketing, "agriculture + super" mode integration and development, strengthen the sharing of department stores and electrical appliances customer resources, and department stores form a collaborative development model with large stores and small stores; (3) Technology empowerment: building an intelligent business system, promoting CRM system, membership system, WBS system and digital upgrading; and making great efforts to build a platform for intelligent agricultural batches. Follow up to pay attention to the effectiveness of the transformation of the company.
Profit forecast and valuation
Based on the gradual elimination of the impact of the epidemic and the quarterly improvement of the company's operations, we raised our earnings per share forecast for 2021 / 2022 by 32% to 0.26 yuan / 0.27 yuan. The current share price corresponds to the price-to-earnings ratio of 2021 Universe, 18,000,000 and 17 times earnings in 2022. Based on the upward revision of the earnings forecast, but considering the impact of the new retail on the traditional format, we raise the target price by 5% to 6 yuan, corresponding to a price-to-earnings ratio of 22 times 2021 / 2022, which has 28% upside space compared with the current stock price.
Risk
The industry competition intensifies and the transformation risk, the real estate regulation tightens.
