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 2022, 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. We believe that the peak sales season for supermarkets is around the Spring Festival. With the frequent offline promotion activities, the growth rate of the same retail store is expected to improve marginally.
Last week’s market review: last week (2022.01.10-2022.01.14), the commercial retail (CITIC) index fell 0.85%, less than 1.13pct of CSI 300 index. Among the 30 CITIC first-class industries, the commerce and retail sector ranked 10th. Among the sub industries in the retail sector, the top sub industries were other chains, supermarkets, convenience stores and department stores, with an increase of 8.95%, 2.41% and 0.87% 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 94, which is in the quantile from small to large since 2005, which is 98.13%; The TTM of Shanghai and Shenzhen 300pe was 13.51 and the quantile was 48.86%.
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 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, 12x and 10x respectively, maintaining the buy rating.
Investment suggestions:
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 recommend paying attention to Chow Tai Fook and Lao Feng Xiang Co.Ltd(600612) .
Investment main line 2: 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 3: 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.
Risk warning: repeated epidemic situation; Macroeconomic depression; Industry competition intensifies.
