Last week’s market review: last week (2021.12.06-2021.12.12), the commercial retail (CITIC) index rose 0.88%, outperforming the CSI 300 index by 2.27pct. Since the beginning of the year, the commercial retail sector has risen 1.15%, outperforming the CSI 300 index by 4.15pct. Among the 30 CITIC primary industries, the commercial retail sector ranked 13th, of which 23 industries rose, including consumer service (+ 9.05%) Food and beverage (+ 5.55%), household appliances (+ 5.16%) led the gains, while national defense and military industry (- 3.08%), coal (- 2.45%), power equipment and new energy (- 1.56%) led the declines. The trade retail industry PE quantile is greater than CSI 300. At present, the trade retail industry PE (TTM) is 107, which is in the quantile from small to large since 2005, which is 99.94%; The TTM of CSI 300 PE is 13.51, and the quantile is 49.41%.
Zhou Du’s core view:
Traditional retail: on December 8, Costco and HEMA x member stores opened a new store respectively. Costco Suzhou store is the second store in Chinese mainland after the first store in Chinese mainland in Shanghai Minhang store in 2019. In addition, the fourth HEMA x member store in China was officially opened in Baoshan Dachang store in Shanghai. After opening, both stores were sought after by consumers. On the contrary, on December 10, the Shanghai Wujiaochang store of Wal Mart shopping mall will be officially closed, and 27 stores have been closed this year. At a time when the operation of traditional supermarkets is generally under pressure, we suggest paying attention to the booming warehousing membership business.
New retail of e-commerce: the performance disclosure of e-commerce in the third quarter of 2021 is coming to an end. Under the factors of stricter regulatory policies and peaking industry traffic, the industry competition is becoming white hot. The overall performance of e-commerce slowed down in the third quarter, of which JD’s performance grew steadily under the condition of weak consumption; Ali’s core business profits are flat, and its strategic business losses. It is expected to concentrate on its main business, continue to capture the sinking market, and taote and taocai continue to increase their support; Pinduoduo reversed its losses in the third quarter and continued to improve the supply chain and optimize the performance chain. The e-commerce platform has been disturbed, shaken and adjusted by negative external factors in the short term, but online consumption is a long trend. We continue to be optimistic about the empowerment of new e-commerce formats. It is suggested to pay attention to community group buying, which has entered the semi-finals of the industry, and the emerging and rapidly developing new format of store self broadcasting.
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 outbreak of wedding market brought by consumption recovery in the short term and the bonus 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% due to its strong profitability. We expect that the company’s revenue growth from 2021 to 2023 will be 79%, 34% and 24% respectively, and the growth rate of net profit attributable to the parent company will be 39%, 24% and 17% respectively. The corresponding PE valuation will be 14x, 11.43x and 9.8x respectively, maintaining the buy rating.
Investment suggestions:
Investment main line 1: in the traditional 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.
Investment main line 2: the new retail field of e-commerce, the rapid development of live broadcasting and store self broadcasting, and the wave of community group buying, showing Matthew effect. It is recommended to pay attention to the business of voice, electricity, Alibaba and tiktok.
Investment main line 3: gold jewelry continues the strong recovery trend and high outlook since the beginning of the year. 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) .
Risk warning: repeated epidemic situation; Macroeconomic depression; Industry competition intensifies.
