Suning Tesco (002024) Quarterly Commentary: Revenue Maintains High Growth Rate Expenses Phased Increase

Suning Tesco (002024) Quarterly Commentary: Revenue Maintains High Growth Rate Expenses Phased Increase
Investment Highlights The company 成都桑拿网 achieved operating income of 622 in 2019Q1.42 ppm, an increase of 25 in ten years.44%, of which the main business income increased by 25.63%.Realize net profit attributable to mother 1.36 ppm, an increase of 22 in ten years.16%, of which Wanda Investment’s fair value gains and losses4.23 ppm and the difference between the fair value share of the identifiable net assets and the book value are included in non-operating income of approximately 4.480,000 yuan, after deducting related effects, the company deducts non-attributed net profit of -9.9.1 billion. The continuous high growth of online overlap and the steady improvement of offline drive the overall GMV growth25.38%.The sales volume of the company’s products in Q1 2019 was 869.2.6 billion, 62 online and offline respectively.26% (+36.09%) and 37.74% (+10.98%).The company unanimously implements the “one big, two small, multi-specialty” store format strategy, promotes the expansion of offline stores, reports that the number of consolidated self-operated stores has reached 9,758; retail cloud franchise stores have reached 2,499, and enjoys county, township and rural consumption bonuses.The scale of online retail self-operated and open platform sales accounted for 70% respectively.04% (+40.87%), 29.96% (+ 26.08) Logistics + finance accelerates to deepen the cultivation of the ecosystem.2019Q1 The company continued to expand its self-built logistics warehouse.At the end of the reporting period, the storage area reached 9.64 million square meters (+37.71%), the distribution network and retail stores simultaneously sink to the county market.Financial business intensive cultivation of the Suning ecosystem, consumer finance, and supply chain financial business increased by 229.66%, 78.01%.In December 2018, Suning Financial Services will increase by 17.857% of new shares, raising 100 million funds, is expected to contribute about 161 investment returns.3.3 billion. The business development led to an increase in the expense ratio during the period.The overall period rate increased significantly by 1.9pp.After the management and R & D expenses are combined, it will increase to 0.19pp to 3.33%, mainly due to the increase in R & D expenses and amortization of distribution incentive expenses; in terms of sales expenses, in order to support the rapid expansion of Suning ‘s small store business, the periodical personnel expenses and warehousing expenses increased rapidly, which resulted in an increase in sales rate1.30pp, transforming the appearance of future small stores, the sales rate will return to normal; in terms of financial rates, the transformation company’s retail and financial services will accelerate, operating capital requirements and income will increase, and the financial rate will be raised to 0.41pp. The channel sinks high on the overlay line.Offline: The company promotes the store layout around the “one big, two small, multi-specialty” strategy, and grasps the consumption bonus of towns and villages in the Spring Festival County to sink the channel. Online learning: Open the platform to continuously increase the volume, strengthen online operations, and re-scale through scale effects.Pricing advantages; the advantages of online and offline integration continue to be prominent; derivative business: the construction of logistics facilities to meet self-employed needs, improve the distribution network, and increase socialized revenue; the financial business forms an ecological closed loop, which will contribute a large amount of investment income after it is issued in 2019. Profit forecast: Taking into account the company’s continued heavy online volume and offline penetration rate, it is estimated that the operating income of 2019-2021 will be 3061.96\3735.59\4295.9.3 billion, taking into account the investment income of Suning Financial Services in 2019, the net profit attributable to mothers in the next three years will be 163.00\38.00\44.08 thousand yuan, EPS is 1.75\0.41\0.47 yuan.The closing prices on April 30, 2019 corresponded to PE of 7, respectively.2\30.9\26.7x, maintaining the rating of “prudent increase”. Risk reminder: the penetration of the third and fourth tiers is less than expected, the online growth rate has surpassed expectations, and appliance sales have fallen short of expectations