\u3000\u3000 Rainbow Digital Commercial Co.Ltd(002419) (002419)
After the turbulence of the epidemic, the online level and experience consumption of the retail industry have developed rapidly. In 2021, the overall consumption resilience of the industry is insufficient, the industry competition is fierce, and the physical retail Wuxi Online Offline Communication Information Technology Co.Ltd(300959) will develop at the same time. Actively develop communities online, carry out live broadcasting, continue to expand home business, and actively promote experiential consumption offline, reshape category structure and strengthen service innovation. Tianhong has basically formed an innovative business model integrating Wuxi Online Offline Communication Information Technology Co.Ltd(300959) and established leading retail digital technology R & D and operation capabilities. Online sales have increased rapidly, the proportion of online sales has increased significantly, offline consumption experience has been continuously enhanced, and store sales and passenger flow have recovered significantly. In 2021, Rainbow Digital Commercial Co.Ltd(002419) ranked 18th in the list of “top 100 Chinese chains in 2020” released by China chain operation association.
The digital transformation strategy has been continuously promoted, and the retail digital technology ability is leading in the industry. The company began to seek digital transformation in 2012 and is committed to providing convenient and efficient services to customers through digital and intelligent technology, and the transformation achievements are constantly realized. 1) Bright online sales: in the first three quarters of 2021, online sales increased by 38% year-on-year, and nearly 180 million people exchanged information or consumption through Tianhong app and Tianhong applet. 2) Digitisation of Shengeng Supermarket: on the basis of forming the business matrix of jixuda + next day + national distribution, the company further improved the online network coverage and distribution speed of supermarkets, and the home sales of supermarkets increased by 15% year-on-year. 3) Full operation of shopping mall Digitalization: online shopping mall operation management platform system, further strengthening the online operation ability, and the overall online rate of shopping mall merchants is 81.5%.
Years of deep cultivation to build a high-quality supply chain, with better quality, lower price and faster speed. The company strictly selects high-quality goods from outside China for customers by building a global procurement network, a fresh direct purchase base, building its own brand and 3R goods, so as to meet the healthy, fast and convenient living needs of customers. On the other hand, the company realizes high customer satisfaction and high floor efficiency by flexibly customizing the content combination of central stores and community stores. In 2021, the company further built a strategic core commodity group and carried out commodity upgrading. In the first three quarters, the international direct purchase / private brand sales / 3R commodity sales increased by 7.2% / 7.2% / 12.6% respectively year-on-year.
The number of stores has been steadily expanded and the content operation is flexible, so as to jointly create a good reputation for customer service. 1) Number of stores: by the third quarter of 2021, the company had settled in 33 cities in 8 provinces / cities including Guangdong, Jiangxi, Hunan and Fujian, with a total of 99 stores, 120 supermarkets and 214 convenience stores, covering a total area of about 4.37 million square meters. 2) Content operation: the company has accumulated rich experience in serving the community over the years, so that Tianhong has the service ability to be closer to the life of urban middle-class families; In 2021, the company will further promote the upgrading of key stores, break through the high-end supply chain, introduce international cosmetics and light luxury brands, improve the commodity structure and enhance the experience value of stores. The number of widely distributed stores, types of multi format stores, high-quality supply chain system and strong digital operation ability jointly create the company’s good reputation for customer service.
Profit forecast and investment rating: optimistic about the value of the company’s offline retail channels and high-quality supply chain, enrich the growth potential of retail formats, reduce the enabling of digitization and intelligence, and the improvement of efficiency can be expected. It is estimated that the company’s revenue in 2021 / 2022 / 2023 will be 13.229/15.218/17.251 billion yuan, with a year-on-year growth rate of 12% / 15% / 13%, and the net profit attributable to the parent company will be 378 / 4.41/533 million yuan, with a year-on-year growth rate of 49% / 17% / 21%. The corresponding dynamic PE: 24 / 20 / 17x, and the “overweight” rating will be given for the first time.
Risk tips: the economic downturn suppresses optional consumption, the epidemic situation repeats, the expansion speed of new formats and new stores is lower than expected, the effect of digital reform is lower than expected, and the competition in the department store industry is intensified.