Recent situation of the company
SUNING announced that the actual controller Zhang Jindong and his concerted actors SUNING Holdings Group, SUNING Electric Appliance Group and Tibet Trust intend to transfer 23% of the shares of the company to Shenzhen International and Kunpeng Capital (the actual controllers are all state-owned assets in Shenzhen). After the completion of the transfer, Zhang Jindong and his co-actor SUNING holding 16.38%, SUNING 5.45%, Taobao China 19.99%, Kunpeng Capital 15%, Shenzhen International 8%, the company became a company without actual controllers, but the core management remained unchanged. Taking this as a node, the company enters a new stage of focusing on the main retail business, and pays attention to the progress of synergy and the improvement of the company's business performance.
Comment
The main contents are as follows: 1. Introduce Shenzhen state-owned shareholders to enhance capital strength and is expected to play a synergistic effect. 1 transaction price: the equity transfer price is 6.92 yuan per share, which is a 10% discount on the average price for 60 trading days before the signing of the agreement; the total consideration is 14.818 billion yuan, corresponding to 258.459 billion yuan of forecast revenue in 2020; 2 significance: on the one hand, the introduction of Shenzhen state-owned investment is expected to optimize the company's financial situation, improve corporate governance and form a diversified shareholder structure. On the other hand, SUNING plans to carry out strategic cooperation with Shenzhen International in logistics, supply chain and other fields (Shenzhen International's logistics warehousing business has covered the country's key regions and node cities, and has a leading advantage in Shenzhen and even South China). Shenzhen International, Kunpeng Capital and its related parties will also empower SUNING in all aspects around the supply chain, e-commerce, science and technology, logistics, duty-free business, etc. In addition, SUNING plans to set up a South China regional headquarters in Shenzhen. Relying on the resource advantage of industrial investors, we think it is expected to enhance SUNING's business ability and market share in the Greater Bay area.
2. The management team is expected to remain stable, and the company will focus on the main retail business in the future, adhere to the transformation of the Internet, promote cost reduction and efficiency, and business performance is expected to be improved. 1 level of governance:
Shenzhen International and Kunpeng Capital will maintain the stability of the company's core management team and actively improve the management system and incentive mechanism; 2 at the operational level: according to the performance of KuaiBao, Suning achieved a revenue of 258.459 billion yuan and a net loss of 3.913 billion yuan in 2020. the substantial profit loss is mainly due to the impact of the epidemic, the provision of large asset impairment losses and increased online subsidies. Looking forward to the follow-up, SUNING plans to focus on the core retail business, promote cost reduction and efficiency, adjust and optimize loss-making businesses such as Tian Tian Express, and we expect the company's business performance to improve gradually.
3. The value of the company's assets is rich. SUNING has a leading self-built logistics network. By the end of 2020, there are 67 logistics bases operating in 48 cities and nearly 10,000 retail outlets (self-operated 2649 + join 7137), with a rich revaluation value. Valuations are historically low.
4. Pay attention to the adjustment and reform progress of the follow-up company. In recent years, in the face of intensified competition in the industry and iteration of the new model, SUNING actively carried out reform and innovation, but also put pressure on the company's profits. We believe that this state-owned equity investment can partially dispel investors' doubts about the company's short-term funds and group debts, and the future adjustment and changes of the company, as well as the synergy with Shenzhen state-owned assets are worth looking forward to, but they also need to be closely followed.
Valuation proposal
Keep the profit forecast unchanged for the time being. The current share price corresponds to 0.21 times the price of 2021. To maintain the rating of the outperforming industry, considering that the effect of the company's business adjustment after the introduction of war investment still needs to be observed, the target price will be lowered by 6.7% to 8.4 yuan, corresponding to 0.25 times Pmax S in 2021, with 20% room for increase.
Risk
Competition intensifies; the impact of the epidemic exceeds expectations; business improvement falls short of expectations; transactions have not yet landed.