The company released its 2020 annual report on April 21. The income realized in 2020 was 15.638 billion yuan (excluding interest income), down 20.47 percent from the same period last year; the net profit of returning to the mother was 112 million yuan, down 35.35 percent from the same period last year, and deducting 85.1 million yuan from the same period last year, down 27.85 percent from the same period last year. The diluted EPS is 0.13 yuan, the return on net assets is 1.53%, and the operating cash flow per share during the reporting period is 1.56 yuan. The company announced the 2020 dividend plan, with a cash dividend of 1 yuan (including tax) for every 10 shares.
Brief comments and investment suggestions.
The income in 2020 was 15.638 billion yuan, an increase of 3.7% in comparable terms and 4.2% in supermarkets.
The total operating income of the company in 2020 was 15.736 billion yuan (including interest income), down 20.23% from the same period last year; operating income (excluding interest income) was 15.638 billion yuan, down 20.47% from the same period last year, of which 4Q income was 3.48 billion yuan, down 28.37% from the same period last year. This is mainly due to the change of joint venture income from the total method to the net method in 2020, and the comparable income (net method) increased by 3.66% in 2020 compared with the same period last year.
In 2020, 35 new stores were opened, including 33 supermarkets, 2 department stores, 15 closed stores and withdrew from the loss-making Chongqing market; by the end of 2020, the company had 420 stores in various formats, covering Hunan, Guangxi, Jiangxi and Sichuan. Sub-format: there are 369 supermarket stores, the flat efficiency of the comparable store net method is 11,000 yuan / square meter / year, the sales revenue of the comparable store increases by 4.17%, which is 4pct higher than that of the comparable store in 2019, and the sales revenue of the comparable store decreases by 17.50%, while the sales revenue of the comparable store decreases by 17.50%, while the sales revenue of the comparable store decreases by 17.50%. Sub-region:
There were 235 supermarket stores and 32 department stores in Hunan, with an increase of 3.53 percent in sales revenue of comparable stores in the province, 134 stores and 19 department stores in other provinces, and an increase of 1.12 percent in sales revenue of comparable stores in other provinces.
We believe that although the company is located in the core province of community group buying, the supermarket and the same store in the province have performed well throughout the year, reflecting to a large extent the endogenous efficiency achievements of digitization and supply chain reform in the past two years. at the same time, the company also actively laid out the community group buying business during the epidemic, giving full play to the value of physical stores with its own advantages.
Sub-format: in 2020, supermarket income increased by 1.57% to 12.124 billion yuan, gross profit margin increased by 1.59pct to 18.50%, department store revenue decreased by 85.54% to 593 million yuan, and gross profit margin increased by 64.35pct to 78.92%.
The sharp increase in gross profit margin of department stores is mainly due to the recognition of the income of associated enterprises by the net method. Sub-region: in 2020, the income of Hunan Province decreased by 23.94% to 9.36 billion yuan, the gross profit margin increased by 4.51pct to 21.89%; the income of other provinces decreased by 17.70% to 4.113 billion yuan, and the gross profit margin increased by 5.64pct to 18.18%.
2. During 2020, the expense rate increased from 6.24pct to 28.67%, mainly due to the change in the income recognition method, and the amount of expenses did not change much. In 2020, the sales expense rate increased from 5.11pct to 24.00% compared with the same period last year, mainly because the joint venture income was recognized by the net method from the total method; the management expense rate increased by 0.37pct to 2.28% compared with the same period last year; and the R & D expense rate increased by 0.04pct to 0.17%.
3. In 2020, the non-return net profit of deduction decreased by 27.85%. The non-net profit of 4Q deduction increased by 47.59%. The total profit in 2020 was 138 million yuan, down 38.84% from the same period last year; the net income from fair value changes was 22.19 million yuan, assets were down 35.35% from the same period last year, and the non-net profit was 85 million yuan, down 27.85% from the same period last year. Of this total, the net profit of 4Q20-57.66 million yuan increased by 3.55%, and that of non-net profit-51.52 million yuan increased by 47.59%.
4. In 2020, the company's digital construction achievements emerged, and the supply chain continued to optimize and upgrade. 1 Digitalization: by the end of 2020, the number of digital members of the company had increased by 8.3 million to 24.7 million, the mobile sales rate reached 78%, and the sales of digital members for the whole year increased by 16.7%. There were 357 online Mini Program and home stores in supermarkets, and the total number of people covered by the Wechat community reached 2.94 million, and the online GMV for the whole year was about 6.3 billion yuan. 2 supply chain: the fresh supply chain reform was launched in 2020, and the sales of the fresh sector were the same as those in 2019. The non-fresh sector focused on expanding the categories of beverages, non-food, mother and baby products, and vigorously developed their own brands.
The judgment of the company. Digital transformation and supply chain reform focus on improving efficiency. 1 Strategic focus, significant regional advantages: the company ploughed Hunan / Guangxi / Jiangxi / Sichuan, spun off e-commerce and ineffective sidelines since 2018, withdrew from the loss-making Chongqing market in 2020, continued to focus on advantageous areas and improve permeability. 2 actively promote digital transformation, all-channel deep coordination: strategic cooperation between Tencent and JD.com, the results of digital transformation are gradually transformed into productive forces, with 24.7 million digital members. (3) to promote the reform of the supply chain with fresh as the core, and expand the key categories and private brands of standard products.
Update profit forecasts. It is estimated that the net profit from 2021 to 2023 is 154 million yuan, 230 million yuan and 305 million yuan respectively, an increase of 37.8%, 49.3% and 32.7% over the same period last year. The market value of 6.3 billion yuan on April 27 corresponds to 41 times, 27 times and 21 times of PE from 2021 to 2023, and 0.39 times, 0.37 times and 0.35 times of PS respectively. Taking into account the continuous deepening of the company's digital transformation, we expect that the future business partnership model and digitalization will jointly improve store operating efficiency and profitability, giving 2021 0.5-0.6 times PS, corresponding to a reasonable market value range of 8.15 billion-9.78 billion yuan, a reasonable value range of 9.44-11.33 yuan (corresponding to PE for 53-64 times), giving "better than the market" investment rating.
Risk tips. Intensified market competition; uncertainty of progress in reducing losses in other provinces; lengthening of the training period; sustained pressure on capital expenditure
