Zhongbai Group announced 1Q21 results: operating income was 3.489 billion yuan, down 11.8% from the same period last year; net profit from home was 2.43 million yuan, up 101.4% from the same period last year, corresponding to net profit per share of 0.004 yuan, which was in line with the previous performance forecast range; net loss after deducting non-recurring profit and loss was 22.92 million yuan.
Development trend
1. There is some pressure on the revenue end, with Q1 revenue down 11.8% from the same period last year. In the post-epidemic era, the domestic consumer market is still gradually recovering. Affected by the community group-buying business launched by many platform companies, the operation of the company's offline physical stores has been significantly affected. 1Q21 revenue fell 11.8% compared with the same period last year, but the decline was narrowed compared with 4Q20's-23.8%. In terms of outlets, the total number of 1Q21 outlets increased by 9 to 1436 compared with the end of 2020, including a net increase in warehousing supermarkets, a net decrease of 7 supermarkets and a net increase of 15 convenience stores.
2. Achievements have been made in saving expenses and reducing consumption, the profitability has been improved, and the net interest rate has returned to normal. 1Q21's comprehensive gross profit margin increased by 2.9ppt to 25.0% compared with the same period last year. From the expense point of view, the overall expense rate decreased by 1.2ppt to 24.9%, of which the sales expense rate decreased by 2ppt to 20.5%, the management and R & D expense rate increased by 0.6ppt to 3.8%, and the financial expense rate increased by 0.2ppt to 0.5% year-on-year. Under the combined influence, the company's net profit margin increased by 4.4ppt to 0.1% compared with the same period last year, and the net loss after deducting non-recurrent losses narrowed 4.4ppt to-0.7%. The non-recurrent profit and loss was mainly 31.95 million yuan of government subsidies.
3. Promote the transformation of new retail and marketing innovation, and pay attention to the follow-up results. The company actively responds to new business type's impact on traditional retail channels and continues to promote strategic adjustment and reform: 1 New retail transformation: deepening online and offline integration to break through digital member marketing system; actively expand community group purchase business, independent research and development to home business in Taiwan, its community group purchase Mini Program has been online in 962 stores; strengthen online operation and management, increase fresh, fast consumption and other categories, online fresh varieties up to 1240 (2) Marketing innovation: the new drainage of powerful members, and the steady growth of the number of digital members. At the same time, carry out live broadcast business, 3.7 million fans watched live in Zhongbai warehouse, and 8 stores of Zhongbai department store carried out live streaming through Mini Program (all the above data are from the company's 2020 annual report). Follow up to pay attention to the effectiveness of transformation and change.
Profit forecast and valuation
Maintain the earnings per share forecast, the current share price corresponds to 2021, 2022, 36, 31, and 31 times earnings per share. Maintain a neutral rating, taking into account the impact of the new retail and online process on the traditional retail industry, and lower the target price by 5% to 6.0 yuan, corresponding to 2021 MP, which is 34 times Pmax E in 2022, which has 10% upside compared to the current stock price.
Risk
Consumption remains in the doldrums; competition in the industry intensifies.