Introduction to this report:
The company focuses on its main business and continues to cultivate supply chain construction. By closing some end stores, promoting omni-channel digitalization, and continuously improving store operation efficiency, the company is expected to turn losses into profits in 2024.
Key points of investment:
Maintain an increase in holdings. Taking into account the adjustments in store business, EPS was reduced by 0.02/0.02 yuan in 2024/25 (previous value was 0.04/0.08 yuan), and EPS was added by 0.02 yuan in 2026. With a valuation of 0.33xPS in 2024, the target price was lowered to 2.96 yuan (previous value was 3.6 yuan), and the increase was maintained.
Performance summary: 2023 revenue of 78.6 billion yuan/ -12.7%; net profit to mother of 1,329 billion yuan, year-on-year loss of 1,434 billion yuan; deducted non-net profit of 1,976 million yuan; year-on-year loss of 589 million yuan. 2024Q1 revenue of 21.65 billion yuan/ -8.98%; net profit to mother of 736 million/ +4.57%; deducted non-net profit of 599 million/ -3.08%.
Continue to deepen supply chain construction and continuously improve logistics and distribution capabilities. The company knows that the supply chain is the foundation. By restoring direct procurement, transforming business models, improving collection capabilities, and using digital empowerment to promote the construction of a sunny and open supply chain. In 2023, private brands achieved sales of 3.54 billion/ +8.26%, and fresh food brands increased 41.3% year over year. At the same time, using big data and AI algorithms, warehousing planning and line management capabilities were continuously improved, and distribution efficiency was continuously improved; the distribution radius continued to expand, and the number of logistics inventory turnover days decreased by 2.5 days over the same period last year.
Adhere to the Yonghui Technology Strategy and promote omni-channel digitalization. Adhering to the Yonghui Technology Strategy and continuously carrying out organizational process changes and business innovation, we have basically completed the construction of digital supply chains, digital stores and digital retail platforms, effectively improving store operation efficiency and providing a solid foundation for future development. At the same time, omni-channel digitalization continues to be promoted. The 2024Q1 online business revenue is 4.1 billion yuan/ +1.99%, and the number of registered members of the “Yonghui Life” app has exceeded 117 million.
Risk warning: The macroeconomic economy is declining, consumer confidence is insufficient; store expansion falls short of expectations.