Zhou Du’s core view:
The strategic planning laid out by jd.com helps achieve the goal of common prosperity. Jingdong is the exclusive interactive partner of China Central Television Spring Festival Gala in 2022, distributing 1.5 billion red envelopes and goodies. As of January 23, more than 600 million annual goods had been sold in Jingdong annual goods Festival. Near the end of the year, Jingdong fresh food and major landmark associations across the country launched the “Spring Festival Gala industrial belt get-together”. Since the launch of the Rural Revitalization “Ben Fu plan”, Jingdong has served more than 1000 industrial belts and helped nearly one million farmers increase their income; In October 2020, jd.com proposed to drive rural areas to achieve trillion output value within three years. By the end of 2021, it had achieved 320 billion, which is expected to achieve the goal ahead of schedule. Jingdong fresh has helped various industrial belts establish production standards and expand market sales, which has driven the market shares of Ningde large yellow croaker and Huanxian lamb to increase by 500% and 350% respectively. On January 28, JD announced that it would invest more than 400 million yuan to increase welfare subsidies for front-line employees who stick to the Spring Festival. In the first half of last year, the average monthly salary and welfare expenditure of logistics front-line employees exceeded 11000 yuan. On February 2, it was announced that Liu qiangdong would donate US $2.34 billion to charities. JD shares are mainly used for social welfare undertakings such as education and environmental protection.
Market review last week:
Last week (2022.01.24-2022.01.28), the retail trade (CITIC) index fell 4.56%, which was greater than 0.05pct of the CSI 300 index. Among the 30 first-class industries of CITIC, the commerce and retail sector ranked 13th. Among the sub industries of the retail sector, except medical beauty, the other sub industries all fell. The top three sub industries with smaller declines were department stores, home appliances 3C and trade III, with declines of – 1.90%, – 3.39% and – 3.88% respectively. The quantile of PE in commercial retail industry is greater than that in Shanghai and Shenzhen 300. At present, the PE (TTM) of commercial retail industry is 88.52, which is 97.69% from small to large since 2005; Shanghai and Shenzhen 300pe (TTM) is 13.06, with a quantile of 42.13%.
Key recommended companies this week:
Chow Tai Seng Jewellery Company Limited(002867) : under the background of the implementation of provincial representative model + common prosperity, the company develops new momentum and maintains the buy rating. The moat of the company lies in its obvious channel advantages and strong profitability of terminal channels. In the future, with the help of the provincial generation model, the power to expand stores is sufficient, which is expected to achieve nationwide coverage and occupy an obvious card position advantage in the low-line market. The company benefits from the release of wedding market demand brought by consumption recovery in the short term and the dividend of leading brands brought by the improvement of industry concentration under the background of common prosperity + the rise of national tide in the long term. The potential growth point lies in the rapid development of e-commerce business and the second growth curve of jewelry sub brands. The company has always maintained a high roe level of about 20%, which is due to its strong profitability. We expect the growth rate of the company’s revenue from 2021 to 2023 to be 79%, 34% and 24% respectively, and the growth rate of net profit attributable to the parent company to be 39%, 24% and 17% respectively. The corresponding PE valuation is 13.43, 10.84 and 9.30 respectively, maintaining the buy rating.
Investment suggestions:
Maintain the “overweight” rating of the commercial retail industry.
Investment main line 1: gold jewelry continues its recovery trend and high outlook. We continue to recommend Chow Tai Seng Jewellery Company Limited(002867) and suggest paying attention to Chow Tai Fook and Lao Feng Xiang Co.Ltd(600612) .
Investment main line 2: in the traditional and new retail field, the business format of warehousing members is in full swing. It is suggested to pay attention to HEMA (Alibaba), Yonghui Superstores Co.Ltd(601933) , Jiajiayue Group Co.Ltd(603708) which actively layout the business format of warehousing stores. Tiktok, a group purchase mighty wave crashing on a sandy shore, has been playing a new role in the new retail business of the new retail business.
Investment main line 3: the background of common prosperity, the current situation of superimposed traffic peaking, and the fierce competition among Internet enterprises. It is suggested to pay attention to JD group, which has low regulatory risk, focuses on the performance efficiency with retail as the king, and builds a moat with the advantages of supply chain.
Risk tips:
Repeated outbreaks; Macroeconomic depression; Industry competition intensifies.
