Event: the company announced on December 22 that the issue of convertible bonds publicly issued by the company on December 20 had been examined and approved by the CSRC, and the total amount of funds raised this time was no more than 1.8 billion yuan. it is mainly used to invest in the construction of commercial complex and intelligent supply chain projects. with a view to continuously consolidate and consolidate the company's supply chain advantages and achieve the company's long-term strategic planning and development goals.
The company currently has 87 large retail stores in Shandong, Jiangsu, Anhui, Shanghai and other provinces and cities.
The company was founded in 1998, mainly engaged in department stores, supermarkets and electrical appliances full category operation as the core retail chain business and brand agency, commercial logistics and distribution business. Strive to create "source batch direct acquisition + brand agent wholesale + logistics warehousing and distribution + self-operated terminal retail (e-commerce)" four in one of the retail and platform operators. In 2018, it acquired equity and operating assets of two subsidiaries of Rakuten Shopping (Hong Kong) and subsidiaries in East China, doubling store size and opening large-scale expansion across the country; according to the company's announcement, there are 87 large retail stores so far, with a total operating area of more than 2 million square meters, a total storage area of nearly 400,000 square meters and retail stores throughout Shandong, Jiangsu, Anhui, Shanghai and other provinces and cities.
According to the company announcement, this convertible bond issue is mainly used for the construction of commercial complex and intelligent supply chain: 1) the commercial complex project, it is planned to invest in the construction of three commercial complexes in Qingdao West Coast New area, Yantai Laizhou City and Yantai Penglai City, which integrate traditional department stores, large supermarkets and shopping malls to provide shopping, catering, leisure and entertainment and other service experiences. Further enrich the business form in the form of self-owned property, improve the comprehensive competitiveness, and ensure the steady development of the company. 2) the intelligent supply chain project, which plans to invest in the second phase of Liqun Intelligent supply chain and Grain Industry Park in Jiaozhou, Qingdao, through the construction of storage facilities such as room temperature and cold chain warehouses and the purchase of domestic and foreign advanced equipment such as automatic three-dimensional warehouse, unstacking robot and automatic conveyor system, to form a large-scale intelligent supply chain logistics center. After the completion of the project, a total of more than 140000 square meters of room temperature and cold chain storage area will be added, which will help the company to continue to improve the unified logistics and distribution network with Jiaozhou as the core and radiate East China, and at the same time improve the scale of the company's third-party logistics and distribution business. enhance the ability of supply chain integration.
If the project is successfully promoted, it will be conducive to store expansion and consolidate the capacity of the backstage supply chain. As mentioned above, if this project is successfully promoted, on the one hand, it will help support the company to continue to expand the size of retail stores, increase market share, enrich retail formats, and better meet consumer demand. On the other hand, it will help the company to continue to expand the scale of brand agency and commercial logistics business, consolidate the foundation of the supply chain, build an intelligent and modern supply chain system, support the expansion of the company's retail stores, and accelerate the improvement of the scale and level of social distribution.
Investment suggestion: the company is the retail leader in Qingdao and adopts the regional agency model; at present, it is speeding up the pace of strategic expansion through multiple means of extension and endogenesis, successfully acquiring 72 stores in eastern China of Rakuten, and promoting restart at a faster speed, and plans to issue convertible bonds to raise funds of no more than 1.8 billion yuan, tamping the foundation of stores and supply chain, which is expected to further promote the growth of revenue and profits. It is estimated that the EPS from 2019 to 2020 will be 0.30,0.39 yuan per share, with a "overweight-A" rating for the first time, with a 6-month target price of 7 yuan.
Risk hint: store expansion is not as expected; regional competition intensifies.
