\u3000\u3 Shengda Resources Co.Ltd(000603) 719 Bestore Co.Ltd(603719) )
Key investment points
Event: the company released the first quarterly report of 2022. In Q1 of 2022, the company achieved a revenue of 2.942 billion yuan, yoy + 14.30%; The net profit attributable to the parent company is 93 million yuan, yoy-8.86%, deducting 62 million yuan, yoy-31.24%.
E-commerce business and direct business grew rapidly, driving the steady growth of overall revenue. In Q1 2022, the company achieved revenue of 2.942 billion yuan, yoy + 14.30%.
By channel, e-commerce business / franchise business / direct retail business / group purchase business increased by 19.99% / 2.86% / 16.28% / 79.72% respectively year-on-year. Under the influence of the epidemic, the income of e-commerce and direct business increased rapidly. At the same time, the group purchase channel also maintained a good growth under the low base.
By region, the revenue of central China / East China / Southwest / South China / North China and Northwest China were + 5.89% / + 8.38% / 21.55% / – 4.88% / + 28.66% year-on-year respectively. It is expected that the company will expand its stores rapidly in southwest, North and Northwest China.
In terms of store opening, in 22q1, there were 21 / – 11 / 24 / – 7 / 5 / 1 stores in central / East / Southwest / South / Northwest / North China respectively. As of the end of the first quarter, the stock stores were 1394 / 674 / 487 / 320 / 119 respectively. It is expected that the stores in first tier cities will be greatly affected by the epidemic. Q1 has signed 78 stores to be opened, including 31 Direct stores and 47 franchise stores.
Online business expansion accelerated and profitability declined in the short term. 22q1’s gross profit margin was 26.30%, down 4.86pct year-on-year. We expect that the main reasons are: (1) the proportion of e-commerce further increased, driving the overall gross profit margin level; (2) In the development of group buying channels, the gross profit margin of gift boxes with an increased proportion in the product structure is low; (3) The cost of imported raw materials (beef, nuts, etc.) has increased; (4) Affected by the epidemic situation in some areas, the cost of express delivery and storage increased. The sales expense rate of 22q1 company was 18.28%, a year-on-year decrease of 2.82pct. We expect that the main reason is that under the influence of the epidemic, the opening of stores slowed down and the cost investment became more rational. Overall, the net interest rate of 22q1 is 3.16%, with a decrease of 0.80pct, and the profitability is still under pressure.
Products and channels are promoted in two rounds, and long-term profit improvement is expected. In terms of channels, the company operates in all channels, with a balanced proportion of Wuxi Online Offline Communication Information Technology Co.Ltd(300959) and goes deep into central China offline. It has steadily promoted the market layout of South China, East China, North China, southwest and northwest, and gradually formed nationalization. In addition to the advantages of traditional e-commerce platforms, online business has quickly penetrated into multiple emerging channel layouts such as social e-commerce and community group purchase, and continues to increase the advantages of self built information system. In terms of products, the company attaches importance to product R & D investment, adheres to the creation of subdivided categories, links the whole link marketing ability, and continues to explore competitive product innovation.
Investment advice: maintain the “buy” rating. Considering that the epidemic disturbs the rhythm of franchise store expansion, we expect the company’s revenue in 22-24 years to be 109.12/128.54/14.88 billion yuan, net profit to be 388494/577 million yuan, EPS to be 0.97/1.23/1.44 yuan respectively (1.02/1.23/1.44 yuan in the previous time), corresponding to the current PE to be 23x, 18x and 16x, maintaining the “buy” rating.
Risk tips: the epidemic continues to spread, the price of raw materials fluctuates, market competition intensifies, and food safety incidents
