Last week’s market review: last week (2021.12.27-2022.01.02), the commercial retail (CITIC) index rose 0.38%, underperforming the CSI 300 index by 0.0022pct. Year to date, the retail sector rose 1.99%, outperforming the CSI 300 index by 7.19pct. Among the 30 CITIC primary industries, the commerce and retail sector ranked 24th, of which 25 industries rose, led by national defense and military industry (+ 4.55%), light industry manufacturing (+ 4.20%), basic chemical industry (+ 3.71%), food and beverage (- 4.77%), coal (- 4.16%) and automobile (- 1.52%). The trade retail industry PE quantile is greater than CSI 300. At present, the trade retail industry PE (TTM) is 94, which is in the quantile from small to large since 2005, which is 98.46%; Shanghai and Shenzhen 300pe (TTM) is 14.02, and the quantile is 55.22%.
Zhou Du’s core view: the epidemic situation in 2021 is frequently disturbed, and the retail industry continues to be under pressure. Offline supermarkets have gradually recovered and are now resilient, with high prosperity of gold jewelry and professional chains; Affected by antitrust regulation and the fading of flow dividends, the e-commerce industry has differentiated its leading performance and slowed down its marginal growth. In the short term, with the weakening of the impact of the epidemic and the gradual recovery of consumer confidence, the prosperity of the retail industry is expected to be marginally boosted; In the long run, the trend of common prosperity and consumption upgrading has not changed, and the online trend of physical goods has not decreased. We look forward to the driving effect of new retail formats on the recovery.
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 the company’s revenue growth 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 14x, 11x and 9.59x 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.
