2018 performance is in line with expectations
Beijing Jingkelong announced its 2018 results: operating income was 11.65 billion yuan, down 2.6% from the same period last year; net profit belonging to the parent company was 63.31 million yuan, up 33% from the same period last year, corresponding to 0.15 yuan per share, which was basically in line with our previous expectations. From a quarterly point of view, Q1/Q2/Q3/Q4 revenue is-4.0% CPM 12.9% CPM 7.5% CPM 1.5%, and net profit is + 17.5% 27.5% and 177.8% respectively. The rapid growth of Q3 and Q4 net profit is mainly due to increased non-operating income and other factors.
Trend of development
1. Same-store sales for the whole year-0.44%, store adjustment is still continuing. Full-year revenue is-2.6% compared with the same period last year, of which 1H/2H is-7.8%, respectively. In terms of business, 1) Retail business: revenue from the main retail business is-5.8% year-on-year, of which same-store sales for the whole year are-0.44% (the same-store growth rate was + 2.96% in 2017), mainly affected by the slowdown in macro consumption growth and intensified competition in the industry. at the same time, store layout adjustment and government demolition and other factors partially drag down the performance. Revenue from hypermarkets, general supermarkets, department stores and other forms of business were-5.5%, 5.6%, 7.6%, respectively, and only convenience stores recorded a + 4% increase. The total number of retail outlets at the end of the period was 206, a net decrease of 14 outlets compared with 2017, including 12 integrated supermarkets / convenience stores respectively. 2) Wholesale business: the revenue of the wholesale business is-1.1% year-on-year. The decline in revenue is mainly affected by the adjustment of the commodity structure of e-commerce sales and the termination of some low-margin brand cooperation, but the performance picked up in the second half of the year.
2. The profitability has improved slightly. The comprehensive gross profit margin increased by 0.7ppt to 23.2% compared with the same period last year, of which the gross profit margin of the main retail industry increased by 0.1ppt to 16.4% year-on-year, mainly due to the optimization of commodity structure and the closure of loss-making shops, while the gross profit margin of wholesale business increased by 0.3ppt to 11.7% year-on-year, mainly due to the elimination of some low-margin goods. On the expense side, the sales expense rate increased 0.7ppt compared with the same period last year, mainly due to the increase in promotion expenses, the administrative expense rate increased by 0.1ppt, the financial expenses increased by 0.1ppt, and the full-year net profit margin increased by 0.1ppt to 0.5% year-on-year.
3. Pay attention to the effect of format transformation and upgrading. In 2019, the company will return to the essence of retail and actively promote transformation and reform. The main retail industry focuses on the transformation and upgrading of stores, expand small community fresh stores, fresh and enhanced supermarkets and other formats, improve the layout of formats; at the same time, comply with the new retail development trend, increase the proportion of online sales. Wholesale business to strengthen brand structure optimization and logistics service capabilities. Follow up to pay attention to the effect of the transformation and upgrading of the company's business format.
Profit forecast
Based on the performance improvement that may be brought about by the store adjustment and upgrade, the profit forecast of 2019 Universe 20e will be raised by 13% Universe 4% to 0.16 Sterling 0.18 yuan.
Valuation and suggestion
The current share price is equivalent to 8 times Pamp E in 2020. Maintain the neutral rating and target price of HK $1.71, corresponding to 9 times Pmax E in 2020, with 15% room for the current share price.
Risk
Consumption continues to be weak; industry competition intensifies
