On January 28, Suning.Com Co.Ltd(002024) released the performance forecast for 2021. The announcement showed that the net profit loss attributable to the shareholders of the listed company was 42.3-43.3 billion yuan.
At first glance, this loss figure is shocking. According to the actual analysis, the biggest reason is that Suning.Com Co.Ltd(002024) combined with the changes of the external environment and the company’s own operation, the company accrues impairment provisions for relevant assets and recognizes investment losses based on the principle of prudence, which is expected to reduce the company’s net profit attributable to shareholders of listed companies by 25.475 billion yuan in 2021.
Although the number is amazing, it can also be said to be “all bad”. Next Suning.Com Co.Ltd(002024) will pack light, realize strategic optimization, retail focus and efficiency improvement, and the business situation will gradually improve
caused by long-term equity investment
Looking at the financial report carefully, we can see that most of the losses of Suning.Com Co.Ltd(002024) this time are the accrued losses of long-term equity investment.
In 2021, the provision for impairment of Suning.Com Co.Ltd(002024) mainly includes the amount affected by the provision for bad debts of accounts receivable of RMB 1.5 billion, the amount affected by the provision for impairment of goodwill and other long-term assets of RMB 4.775 billion, and the amount affected by the loss and impairment of long-term equity investment of associated enterprises of RMB 19.2 billion, accounting for nearly 80%. However, it is worth noting that these projects are non cash projects, so they will not affect Suning’s cash flow in 2021.
If calculated in detail, excluding the impact of impairment provision, investment loss, reversal of deferred income tax and other factors, Suning.Com Co.Ltd(002024) the net profit loss attributable to shareholders of listed companies is expected to be RMB 8.768 billion-9.268 billion in 2021.
Some analysts said that a series of impairment events in Suning.Com Co.Ltd(002024) 2021 will not affect the current cash flow level of the company, nor the current daily operation and the development of various business cooperation. Suning.Com Co.Ltd(002024) also said that it would continue to recover funds through various paths and methods to minimize the loss to the company as much as possible
significant achievements in cost reduction and efficiency improvement
According to the announcement, the sales scale of Suning.Com Co.Ltd(002024) in the fourth quarter of 2021 is expected to increase by 25.48% month on month compared with the third quarter. The EBITDA in November was RMB 80 million, which became positive, and continued to be positive in December. The company expects EBITDA to remain positive in the first quarter of 2022.
In July 2021, with the support of Jiangsu Province and Nanjing municipal government, Suning.Com Co.Ltd(002024) introduced new strategic investors, entered a new development stage, and accelerated the work of increasing income, reducing cost and improving efficiency.
The announcement shows that in late August 2021, with the stability of bank enterprise cooperation and incremental credit such as Bank Of Jiangsu Co.Ltd(600919) , Bank Of Nanjing Co.Ltd(601009) , with the support of major brands, Suning.Com Co.Ltd(002024) liquidity gradually recovered and sales revenue gradually increased. From September to November 2021, the sales increased month on month, and the sales scale in the fourth quarter is expected to increase by 25.48% month on month compared with the third quarter.
In 2021, Suning.Com Co.Ltd(002024) accelerated the transformation of retail service providers, and the retail cloud business continued to maintain rapid development. During the reporting period, 2678 franchise stores were opened to expand home and fast repair tracks. By the end of the reporting period, Suning.Com Co.Ltd(002024) retail cloud franchise stores had nearly 10000. In the fourth quarter, retail cloud took the lead in restoring growth in all channels, reflecting strong competitiveness.
While stabilizing liquidity and restoring operation, Suning.Com Co.Ltd(002024) strengthen cost reduction and efficiency improvement. The company strictly refined management, strictly controlled various expenses, streamlined organization and improved human efficiency. With the coordination and assistance of internal and external resources, the performance of Suning.Com Co.Ltd(002024) in the fourth quarter showed an inflection point. According to the announcement, Suning.Com Co.Ltd(002024) the scale of commodity sales revenue in the fourth quarter of last year is expected to increase by 25.48% month on month compared with the third quarter, and the total expenses of the company are expected to decrease by 13.6% month on month. The net profit attributable to the shareholders of Suning.Com Co.Ltd(002024) listed companies is expected to lose 1.2-1.7 billion yuan, 59% – 71% month on month compared with the third quarter, and the loss is significantly narrowed. In November 2021, the EBITDA was RMB 80 million, which became positive and continued to be positive in December
facing the future
For the development plan for 2022, Suning.Com Co.Ltd(002024) said in the announcement that with the support of provincial and municipal governments and under the leadership of the new board of directors, the company will implement the three strategies of “doing a good job in retail service providers, strengthening the supply chain and improving business quality”, and continue to promote revenue growth, reducing costs and improving efficiency and revitalizing assets.
At the level of revenue growth, focus on the core business of 3C home appliances, give full play to the company’s Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration ability in scene experience, strengthen the ability of supply chain integration, and highlight the service performance ability in overall solutions; The channel side will further tap the sinking market potential and continue to accelerate the development and efficiency improvement of retail cloud business.
In terms of cost reduction and efficiency improvement, through the optimization of store model, vigorously promote the decline of store rent level and the improvement of store floor efficiency; Further improve organizational efficiency and team output efficiency, and reduce various cost levels; Further improve the accuracy and input-output level in user acquisition and marketing. At the level of asset revitalization, it will continue to promote the fund operation of commercial property and logistics assets, strengthen the withdrawal and collection of foreign investment equity, accelerate the recovery of the company’s cash flow, and promote the recovery of zero supply relationship and the improvement of income scale and operating performance.
On this basis, Suning.Com Co.Ltd(002024) is expected to become a positive EBITDA in the first quarter of 2022.
On January 25, Haier team also entered the Suning.Com Co.Ltd(002024) headquarters to carry out joint office. It is understood that in addition to Haier, major brand suppliers such as home appliance 3C will also enter the Suning.Com Co.Ltd(002024) headquarters this year to further strengthen cooperation through joint office.
In addition, Suning.Com Co.Ltd(002024) will reshape the competitiveness of offline stores as one of the cores of innovation and change. Since the launch of the first “integrated sales and service” community store of the retail cloud in December last year, it has been landing in Nanjing, Shanghai, Chongqing and other cities across the country in more than a month. At the beginning of this month, Suning.Com Co.Ltd(002024) launched its first innovative store product in 2022. The “four in one” store of home decoration, home appliances and home services landed in Nanjing Xiaolingwei business district. During the opening period, home appliance purchase orders accounted for nearly 40%, the consumption of replacing old with new exceeded 400000, and the customer unit price increased by 60% compared with the average level in 2021.
The scenario and service optimization of the store model means that Suning.Com Co.Ltd(002024) comprehensively starts a new round of improvement of operation and service capacity. Suning.Com Co.Ltd(002024) said that in 2022, the new store model facing the future will be taken as the core retail product, and the subsequent large store model based on the future will also be upgraded to create a new temsector benchmark by starting from users, integrating scene goods, connecting performance services and cross domain double-line promotion.
Analysts believe that the purpose of sorting out the past and leaving behind the historical burden is to better carry light and start again with the introduction of war investment, and the enterprise is expected to enter a new stage of development.
