Maintain and increase holdings. Taking into account the epidemic situation and the impact of community group buying, the forecast EPS for 2021-22 is lowered to 0.170.21 yuan (formerly 0.32pm 0.44 yuan), and the growth rate of EPS is forecast to be 0.24 yuan by 18% in 2023.
With reference to the comparable company valuation in the same industry and considering the company's focus on the main supermarket business / actively promoting digitization, the company will be given a target price of 55 times PE, in 2021 to 9.35 yuan to maintain an increase in holdings.
Business expansion and structural strategic adjustment, focus on the main business of the supermarket to improve quality and efficiency. 1) the company is the retail leader of chain merchandise in central and southern China, and has formed a business pattern of "based on Hunan and cross-regional development". Outside the province is mainly Jiangxi, Sichuan, Guangxi and other places, coverage and access rates have effectively increased, accounting for 26.3% of non-provincial income in 2020 (7.4% in 2013). 2) there is structural adjustment in the regional strategy, participating in the heavy mixed reform in 2020 (the company's major shareholders participate in the 100 major shareholders), and withdrawing from the Chongqing area with heavy losses, which may improve the profits in 2021; Sichuan mainly focuses on southern Sichuan; 3) focus on the main business of supermarkets (77.5% of income), and gross profit margin rebounded to 18.5% in 2020. In 2017-20, the number of supermarkets 267,290, 348, 369. 4) promote the reform of fresh supply chain with processing and fresh as the core; 5) promote the partnership system.
Digital power has achieved remarkable results, accelerating online and offline integration. 1) relying on the advantages of Tengjing cooperation and logistics to actively promote digitization, by the end of 2020, digital members have reached 24.7 million (+ 51%), and sales of digital members have increased by 16.7%; online GMV is about 6.3 billion yuan (+ 180%); 2) there are 357 Mini Program stores in the company's supermarkets, with 357 communities covering 357 stores, the number of communities is 38 000, and the total number of Wechat communities is 2.94 million. 3) the number of dynamic employment platform users is 44000, the transaction volume is 25.71 million, the optimization of personnel in some stores is reduced by 50%, and the proportion of dynamic employment is as high as 60%.
The completion of the new phase of share buyback, or the promotion of equity incentives to demonstrate confidence in the development. In 2020, about 2369 million shares will be repurchased at 9.2-14.74 yuan per share, accounting for 2.74% of the total share capital, with a total payment of about 300 million yuan; in the new phase of 2021, about 1258 million shares will be repurchased at 7.45-8.39 yuan per share, accounting for 1.46% of the total share capital, with a total payment of about 100 million yuan; repurchase shares will be used for equity incentives or employee stock ownership.
Risk hints: the epidemic situation is repeated, regional expansion, digitization is not as expected, and so on.