1Q21's performance is in line with our expectations.
Dashang Co., Ltd. announced 1Q2021 results: revenue of 2.46 billion yuan, an increase of 19.1% over the same period last year; net profit of 290 million yuan, an increase of 431.9% over the same period last year, corresponding to a profit of 0.99 yuan per share; and 240 million yuan of non-return net profit, an increase of 707.1% over the same period last year, which is in line with our expectations. The profit base was low under the influence of the epidemic in the same period last year, and with the effective control of the epidemic, the performance gradually rebounded, but compared with the company's performance in the same period in 19 years, there is still room for repair. 1Q21's return net profit and non-return net profit decreased by 25.3% and 35.5% respectively compared with the same period in 19 years, mainly because the income side has yet to be restored and the impact of new leasing standards.
Development trend
1. Revenue increased by 19.1% compared with the same period last year, with revenue from department stores rebounding even higher.
From the perspective of region and format, the revenue of Dalian 1Q21 department store / supermarket / electrical appliance is + 161.77%, 35.36%, 44.96%, and + 321.60%, 386.97%, and + 724.09%, 68.80%, respectively, because of the optional attributes of department store / supermarket / electrical appliance in Daqing, and + 724.09%, 68.80% in Mudanjiang. Because of the optional attributes, the revenue of 1Q21 department store / supermarket in Mudanjiang is + 724.09%, 68.80%, respectively. In the same period last year, it was more affected by the epidemic, and the rate of 1Q21 rebounded was higher.
2. Profitability has improved, and there is still room for profit repair. 1Q21's gross profit margin decreased by 7.8ppt to 42.1% compared with the same period last year, mainly due to the adjustment of self-owned housing depreciation fee, land use right amortization fee, use right asset depreciation fee, long-term prepaid expense amortization fee, lease fee, property fee and so on from management expenses to operating costs. On the expense side, the expense rate during the period decreased from 17.4ppt to 25.4% compared with the same period last year; the sales expense rate decreased from 3.0ppt to 14.3% year-on-year, mainly due to the recovery of income and dilution; the management expense rate decreased to 8.8% year-on-year, mainly due to the decline in gross profit margin; the financial expense rate increased by 3.1ppt to 2.3% year-on-year, mainly due to the impact of the new lease standards. Under the combined influence, the company's net interest rate increased to 11.8% compared with the same period last year, and the deduction of non-net interest rate increased 8.4ppt to 9.9% year-on-year, and the company's profitability was greatly improved compared with 1Q20. Compared with the performance level of 388 million yuan of net profit and 377 million yuan of non-return net profit in the same period in 19 years, we think that the company's profits still have room to repair.
3. Continue to pay attention to the effect of the company's business adjustment. While the epidemic situation is under control, the company actively adjusts its online and offline business model: in terms of offline business, the company pays close attention to the trend of offline consumption upgrading to create a modern and international physical business professional platform of Dashang City Paradise, with the goal of building it into a modern and internationalized landmark physical business complex.
In the aspect of online business, relying on the physical store network and Tiangou.com technology platform, we can develop online shopping, create a private domain ecology, develop "oversold box" Mini Program, and carry out live streaming activities to drain offline business. We suggest to follow up to pay attention to the effect of the company's online and offline business adjustment.
Profit forecast and valuation
The earnings per share forecast for 2021 / 2022 will remain unchanged, and the current share price corresponds to a price-to-earnings ratio of 10 / 9 times 2021 / 2022. Maintain the outperform industry rating and maintain the target price of 24.0 yuan, corresponding to 12 times 2021 price-to-earnings ratio and 11 times 2022 price-to-earnings ratio, which has 20.4% upward space compared with the current stock price.
Risk
Consumption continues to be weak; repeated risk of epidemic situation; intensified competition in the industry; risk of legal action.