Affected by increased competition in new business formats such as community group buying and the year-on-year decline in CPI, etc., the company had -9.2% of the same store in 21Q1, but its performance was superior to that of its peers in the face of the impact. 2021 will be the first year of the company's strategic development. It will shift from the original “passive defense” model to an “active attack” model, where short-term profits will be invested in long-term potential businesses (supermarkets, community group purchases, supply chain businesses) in exchange for long-term growth space.
Due to factors such as 2020Q1's high sales base and increased competition, the company's revenue and profit declined year-on-year in 2021Q1. From 2020/1/1 to 2021/3/31, the company achieved operating income of 124.33 billion yuan, -2.0% year on year; product sales revenue was 119.84 billion yuan, -1.7% year on year; attributable net profit was 3.57 billion yuan, -15.4% year on year. Among them, the company's revenue in 2021/Q1 was 28.85 billion yuan, -8.5% year on year, product sales revenue was 27.8.6 billion yuan; year-on-year was -9.1%; attributable net profit was 7.0 billion yuan, -49.6% year on year.
The same store declined, the opening of a steady store, and the transformation of stores. Same store: 2020/1/1 to 2021/3/31 The company's same-store sales -1.8%; of these, 21Q1 same-store sales were -9.2% (mainly due to last year's high base and the year-on-year decline in CPI in 21Q1).
Showroom: 2021Q1, the company opened 6 new large stores and 8 Xiaorunfa supermarkets. As of 2021/3/31, the company had a total of 490 hypermarkets, 6 of which were Runfa, and 32 Xiaorunfa. In order to meet the convenience needs of customers, the company's future showrooms will be the focus of the company's future showrooms: we expect the company to open 30-50 new Zhongrunfa supermarkets and 200-300 Xiaorunfa supermarkets throughout 2021. Store transformation: The categories and functions of stores will be restructured (expand the fresh food area, establish quick pick-up warehouses, etc.); as of 2021/3/31 (15-month reporting period), 38 hypermarkets have been restructured, and 40-50 hypermarkets will be restructured every year in the future.
Multiple business formats and omni-channels are developing at an accelerated pace. The business format is fully explored through a comprehensive layout of hypermarkets+Zhongrunfa+Xiaorunfa; the channel is fully explored through offline+online B2C+online B2B+ community group buying. Online B2C business:
From 2020/1/1 to 2021/3/31, sales were +64% year on year, total order volume +60% year on year, customer unit price was 70 yuan (+2.3% year on year); 2021Q1, the average daily order volume of the company's one-hour delivery business was nearly 1,100 orders (+40% compared to the same period in 2019), and the customer unit price was 68 yuan (+6% compared to the same period in 2019). Community Group Buying: The company differentiates community group buying (focusing on quality and profit) through the cooperation of Cainiao Station and the Self-Development Group Feiniu Group (focusing on quality and profit); as of 2021/3/31, the total number of sites of Yifan and Feiniu Group was 50,000+, with an average customer unit price of about 65 yuan.
Risk factors: Low consumption, intensification of the impact of diversified business formats, poor recovery in offline traffic, and the cultivation and sales of small and medium-sized supermarkets fell short of expectations.
Investment advice: Starting in 2021, the company's business strategy will shift from passive defense to active attack. Although the increase in marketing expenses brought about by expanding businesses such as community group buying in the short term and the nurturing period of Zhongrunfa and Xiao Runfa will erode some short-term profits, it is poised for the company's long-term growth. The company's 2021-23 revenue forecast was 99.73 billion/106.56 billion dollars/114.35 billion yuan, and the net profit forecast for 2021-23 was 2.31 billion/2.78 billion dollars/3.01 billion yuan. The corresponding EPS forecast for 2021-23 was 0.24/0.29/0.32 yuan respectively. Combined with industry comparable company valuations, the company was given 24x PE in 2021, corresponding target price of HK$6.9, maintaining the “increase” rating.