The company released its semi-annual report for 2021, with operating income of 7.308 billion yuan in the first half of the year, down 14.14% from the same period last year, and net profit of 208 million yuan, an increase of 25.11% over the same period last year, deducting non-return net profit of-131 million yuan. The company's digital operation is advancing steadily, the relative rigidity of short-term expenses brings performance fluctuations, and the net interest rate is expected to improve in the future. Maintain the highly recommended-A rating.
Operating income is under short-term pressure, and the number of stores remains stable. In the first half of 2021, the company realized operating income of 7.308 billion yuan, down 14.14% from the same period last year, and net profit of 208 million yuan, an increase of 25.11% over the same period last In terms of products, in the first half of 2021, the operating income of the company's supermarket business was 5.658 billion yuan, down 14.68% from the same period last year, the operating income of home appliance business was 25 million yuan, down 94.66% from the same period last year, and the operating income of department store business was 336 million yuan, an increase of 25.38% over the same period last year. Wholesale business realized operating income of 42 million yuan, an increase of 29.36% over the same period last year, and operating income of logistics and advertising business reached 106 million yuan. Year-on-year increase of 642 million yuan, other business income of 1.142 billion yuan, an increase of 12.99% over the same period last year. In the first half of 2021, the company opened 15 new supermarkets and closed 15 stores that had no hope of reversing losses or property rents could not be renewed within 2-3 years. By the end of June 2021, the company had 417 stores, including 369 supermarkets, 48 department stores, 369 stores in Hunan Province and 48 outside the province.
The new accounting standards superimposed by the epidemic led to an increase in gross profit margin / expense rate. In the first half of 2021, the company's gross profit margin was 29.98%, an increase of 2.29pct over the same period last year, mainly due to changes in accounting standards. In the first half of 2021, the company's sales expense rate was 25.39%, an increase of 4.24pct compared with the same period last year, mainly due to large investment in new store promotion fees, management expense rate of 2.48%, year-on-year increase of 0.34pct, financial expense rate of 3.58%, and 1.55pct increase over the same period last year, mainly due to the implementation of the new lease standards and the increase in recognized interest expenses. The net return rate of 2021H1 was 2.95, which increased 0.93pct compared with the same period last year, mainly due to the investment income from the completion of the real estate asset securitization project in Bubugao Plaza, Jinxing Road.
With the steady progress of digital operation, the operating efficiency is expected to be improved. In terms of digitization, by the end of June 2021, the company had 371 stores (including 371 for Better, 234 for JD.com, 325 for ele.me, 260 for Meituan and 6 for multi-point), 371 self-service cashier stores and 374 stores covered by the community. The company achieves 27.71 million digital members, and digital members contribute 71.5% of the total sales. The online GMV in the first half of 2021 was 3.037 billion yuan. At the same time, the company has fully implemented flexible recruitment, and the number of users of the Xiaobu Leye employment platform has reached more than 130000, with an average of 609 new registrations per day.
Investment advice: the company's digital operation is advancing steadily, the relative rigidity of short-term expenses brings performance fluctuations, and the net interest rate is expected to improve in the future. The company is expected to have a net profit of 1.15 PE 1.32 / 156 million in 2023, respectively. The current share price corresponds to 53X in 2021, maintaining a "highly recommended-A" rating.
Risk tips: tighter policy supervision, intensified competition in the industry, a significant decline in passenger flow and other risks.
