2018A/2019Q1 achieved year-on-year operating income of + 53.6% Universe 2.2%, and attributable net profit of-17.1% Maximi 15.3%, which was lower than market expectations. Inventory risk occurs due to the joint effect of its own business model and external influences. The provision of 540 million inventory decline in 2018 is a drag on performance, 2019Q1 is still in the adjustment period, and business improvement needs to be followed.
2018A/2019Q1 realized operating income of 21.53 billion / 4.72 billion yuan, compared with the same period last year, with a net profit of 620 million / 220 million yuan, which was lower than market expectations. 2018Q1-4 revenue year-on-year + 74% 2019Q1 revenue + 2.2% year-on-year. 2018A/2019Q1 deducts non-attributable net profit of 570 million / 210 million yuan, 16.8% of which is-22.3% of the same period last year. The provision of 590 million yuan for asset impairment in 2018 is a serious drag on the performance, of which the provision for bad debts / inventory depreciation / goodwill impairment is 44 million / 543 million / 4 million yuan respectively.
Self-management mode based on its own channel, high proportion of OEM's own brand and category characteristics are the root causes of inventory risk in the company. The company's sales model is self-supporting, mainly through its own channels and supplemented by third-party channels to sell goods directly to consumers at home and abroad. In 2018, the company's cross-border export self-supporting website realized operating income of 8.1 billion yuan, accounting for 52% of the company's cross-border export revenue / 38% of total revenue respectively. In terms of commodity supply chain, there are nearly 120 private brands in the OEM model in 2018, accounting for 39% of revenue; third-party supplier brands are mainly buyout. In terms of category structure, the income from clothing / electronic products / maternal and child products accounted for 15.8% of Prida, 56.6% and 27.7% in 2018.
Cross-border export / import revenue is + 19% compared with the same period last year. Pattuson and Youyi e-commerce are growing rapidly. In terms of cross-border e-commerce exports, business income reached 15.49 billion yuan in 2018, + 19% year-on-year, of which Global Tesco revenue was 12.07 billion yuan, + 14% year-on-year; Patuxun's income was 3.42 billion yuan, + 41% year-on-year. In terms of cross-border e-commerce imports, business income reached 5.98 billion yuan in 2018 (+ 41% compared with the same period last year), of which Youyi e-commerce consolidated since February 2018, contributing 5.61 billion yuan in income during the reporting period, accounting for 26% of the income.
The comprehensive gross profit margin fell sharply and the investment in research and development increased. 2018A/2019Q1 company comprehensive gross profit margin 40.6% Universe 43.3%, year-on-year-9.2/-1.4pcts, wherein, maternal and child products / electronics / clothing household gross profit margin-5.7pcts/-0.1pcts/-1.3pcts. In 2018, the company's sales / management / financial expense rates were 31.5%, 1.7%, 0.9%, respectively, compared with the same period last year. The sales / management / financial expense rates of the company were 31.6%, 2.9%, 1.8%, and-2.2/+1.3/-0.6pcts, respectively. In 2018, the company completed the upgrading of the underlying structure of the self-supporting website and the optimization of e-commerce system, with an overall R & D investment of 120 million yuan, + 53% compared with the same period last year. To sum up, the period expense rate of 2018A/2019Q1 is 34.3%, 37.0%, year-on-year-7.9/-0.9pcts.
Risk factors: inventory management risk, foreign trade related policy risk.
Investment suggestion: the company's own channel-based business model, with a high proportion of own brands, and clothing / electronics-based business model brings inventory management pressure. In 2018, the company's rapid expansion is under greater operating pressure due to the impact of capital. Full provision for asset impairment of 590 million yuan will be loaded light. 2019Q1 is still in the period of operating adjustment, and its performance improvement remains to be seen. The operating income forecast for 2019 was lowered to 23.9 billion yuan (formerly: 37.42 billion yuan), the revenue forecast for 2020-21 was increased by 26.41 billion / 29.13 billion yuan, the EPS forecast for 2019 was lowered to 0.66 yuan (original: 1.15 yuan), and the EPS forecast for 2020-21 was increased by 0.73 EPS 0.80 yuan. In view of the fact that the company's business is still in the process of adjustment, the target price is given 13 yuan and downgraded to "overweight" rating.