1H21's performance is in line with the previous forecast.

Youa Co., Ltd. announced 1H21 results: operating income was 1.3 billion yuan, up 47.3% over the same period last year, and net profit was 195 million yuan, an increase of 140.8% over the same period last year, deducting 193 million yuan from non-parent net profit, an increase of 94.3% over the same period last year, which was in line with the previous performance forecast. From a quarterly point of view, Q1/Q2 revenue increased by 42.9% and 52.3%, the business situation gradually picked up, the net profit of homing increased by 190.2% and 95.3%, and the net profit of non-homed increased by 203.3%, 29.5% and 29.5% respectively.

1. The operation has gradually resumed, and 1H21 revenue has also increased by 47.3%. In the first half of 2021, the company's main retail industry revenue increased by 26.3% to 1.13 billion yuan, mainly due to the low base during the epidemic last year, the passenger flow of 1H21 stores gradually picked up, and the operations of department stores, home appliances and convenience stores all improved, leading to the recovery of revenue. In terms of online channels, the company's self-built platforms such as "Youa overseas purchase" and "Youawei Store" contributed 34 million yuan in revenue, while the holding subsidiary O'Paiyi luxury remittance realized 367 million yuan in revenue on third-party platforms such as Tmall, JD.com, poison, and other third-party platforms. In terms of exhibition stores, the company added 9 7-Eleven convenience stores (including 3 franchises) in the first half of the year, and the total number of stores at the end of the reporting period reached 42 (including 26 convenience stores, of which 3 joined).

2. Profitability has been repaired. 1H21's gross profit margin also increased by 2.6ppt to 50%, mainly because the return expenses for entrusted operation of shops under the new lease criteria are no longer accounted for through "other business costs". On the expense side, the sales expense rate is reduced by 6.1ppt to 16.3%, the management plus R & D expense is reduced by 7.3ppt to 19.6%, and the financial expense rate is reduced by 0.4ppt to 11.5%. We think it is mainly due to the restoration of rigid expenses such as diluted rent and employee compensation. Under the combined influence, the company's net interest rate increased by 5.8ppt to 14.9%, deducting non-net interest rate by 3.6ppt to 14.8%, and its profitability was repaired.

3. Continuously pay attention to the progress of business innovation and service upgrading. The company actively promotes the innovation, change and service upgrading of its main business: 1) offline, department stores and Olai formats continue to promote the digital construction of offline stores, and the city Olai Happy Store, which opened on May 28, has added intelligent experiential services; convenience stores plan to accelerate the expansion of 20 convenience stores in the form of franchise in Q3 and accelerate the franchise of 7-Eleven convenience stores. 2) on the online side, while constantly improving "you A Shopping", it launched the "you A Mall" on July 17, further promoted the deep integration online and offline, and established Hunan regional strategic cooperation with China Telecom Corporation. Plans to work together to create a 5G Internet of things smart home shopping platform.

Profit forecast and valuation

The earnings per share forecast for 2021 / 2022 will remain unchanged, and the current share price corresponds to 15.5 to 14.5 times earnings in 2021 / 2022. Maintain the outperform industry rating and maintain the target price of 4.13 yuan, corresponding to 19.7 swap 18.4 times Pamp E in 2021 / 2022, which has 27% upside space compared to the current stock price.

Risk

Competition in the industry intensified, consumption remained in the doldrums, and the epidemic situation was repeated.