1H21 performance is lower than we expected.
Gome Retail announced 1H21 results: revenue was 26.04 billion yuan, an increase of 36.5%, and a net loss of 1.974 billion yuan per share, corresponding to a loss of 0.09 yuan per share, which narrowed by 24.7% compared with the same period last year, which was lower than our expectations, mainly due to increased competition in the industry and higher input costs in the transitional period of operation.
Trend of development
The main results are as follows: 1. the revenue has achieved restorative growth after the epidemic, which is still under pressure compared with the same period in 2019. In the first half of the year, the revenue reached 26.04 billion yuan, compared with an increase of 36.5%, compared with a decline of 24.2% in 1H19, and the operation of offline stores picked up somewhat. In the first half of the year, the revenue of 1888 comparable stores increased by 34.06%, and the revenue of county stores accounted for 12.88% of the same period last year. The proportion of new business income further increased, and the proportion of revenue from cabinet and electrical integration, home decoration and home decoration accounted for + 0.83ppt to 7.85% compared with the same period last year. In terms of product structure, the group has a total of more than 600000 SKU in the first half of the year, of which non-household appliances account for more than 90%.
2. The change of income structure improves the gross profit margin, and the cost control is effective. In the first half of the year, the consolidated gross profit margin increased by 2.6ppt to 14.25%, of which the sales gross profit margin also increased by 3.05ppt to 12.03%. The proportion of sales of products with higher gross profit margins, such as audiovisual, ice washing and white small, increased by 9.73ppt to 48.59%. In the first half of the year, the company strengthened the control of sales and management expenses, and the expense rate decreased from 3.03ppt to 19.09%. Among them, the sales expense rate also decreased to 14.26%. The rate of management expenses has been reduced to 4.07% by 0.65ppt, and the rate of other expenses by 0.73ppt to 0.76%. Under the combined influence, the net loss of 1H21 homing is 1.974 billion yuan (1H20 homing net loss is 2.623 billion yuan). As of the end of June, the company's cash and cash equivalents were 6.079 billion yuan, down 36.7% from the beginning of the year, mainly due to debt repayment.
3. Pay attention to the transformation of the company's operation and the progress of external cooperation. The company continues to build a new digital omni-channel platform around the "family life" strategy. In the first half of the year, GMV on e-commerce platforms such as JD.com increased by 24.42% compared with the same period last year, while its own "True Happy" platform interacts with offline stores and provides services to families in communities of 1-8 kilometers in the region. The company actively promotes the upgrading of entertainment marketing through live streaming and other modes, completing about 75000 live broadcasts in the first half of the year, reaching more than 38 million users. In addition, the company announced that it has entered into a framework cooperation agreement with Shenzhen Investment Capital and Shenzhen Yiyatong, which has the background of deep investment control, and the three parties plan to cooperate in capital, supply chain, channels, and so on. In the future, Shenzhen Capital and Shenzhen Diatong may invest in a number of projects including "True Happy" online platform, and the relevant progress needs to be tracked continuously.
Profit forecast and valuation
Based on the intensification of competition in the industry and the uncertainty of the company's operating transformation, we have lowered our earnings per share forecast for 2021 / 2022 from-0.05max 0.00 yuan to-0.1310.02 yuan. The current stock price corresponds to 0.3 times Pamp S in 2021 / 2022, maintaining a neutral rating, considering that the forecast adjustment and short-term performance pressure are partly due to the impact of the company's strategic investment, lowering the target price by 17% to HK $0.87, corresponding to 0.3 times Pamp S in 2021 / 2022, there is 6% upside space.
Risk.
The competition in the industry continues to intensify, the epidemic situation has repeatedly exceeded expectations, and the effect of the transformation is less than expected.