Zhou Du’s core view:
The retail data of the Spring Festival showed differentiation, with the recovery of gold and jewelry picking up and ushering in the consumption peak. Major jewelry brand stores in some regions increased by more than 45% year-on-year in January. Among them, domestic brands such as Lao Feng Xiang Co.Ltd(600612) , Chow Tai Seng Jewellery Company Limited(002867) have obvious advantages in sales performance. Under the high base effect of last year, Hong Kong funded brand Chow Tai Fook still has positive growth this year, but the growth rate is relatively low. There are three main reasons for the strong demand for jewelry during the Spring Festival: 1. The Spring Festival this year is earlier than last year, and the sales promotion before the festival is obvious; 2. The comprehensive conversion of terminal buy it now gold to gram weight has an obvious effect on the improvement of gold shipments; 3. The impact of the local spring festival policy this year is limited, and the sales growth in low-level cities is significantly better than that in the first and second tier cities.
Market review last week:
Last week (2022.02.07-2022.02.11), the retail trade (CITIC) index rose 3.92%, outperforming the CSI 300 index by 3.10pct. Among the 30 first-class industries of CITIC, the commerce and retail sector ranks 15th. Among the sub industries of the retail sector, the top three sub industries with the highest growth were home appliances 3C, department stores and other chains, with the growth rates of 9.07%, 7.69% and 6.39% 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 91.05, which is 97.70% from small to large since 2005; Shanghai and Shenzhen 300pe (TTM) is 13.36, with a quantile of 46.56%.
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 14.84, 11.98 and 10.28 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.
