Liqun shares (601366): Shandong regional profitability improved, new regional incubation dragged down performance

Core point of view: Shandong region’s revenue has steadily increased, and the incubation of the new region has dragged down the overall performance. The company issued 1Q19 financial results and achieved revenue of 35.

90,000 yuan, an increase of 16 in ten years.

9%; net profit attributable to mother 0.

97 ‰, 38 years ago.

5%; deduct non-net profit 0.

69 ppm, with a ten-year average of 52.

95%.

In terms of regions, the Shandong region achieved revenue of 31.

32 ppm, an increase of ten years.

87%; net profit attributable to mothers was 20,000 yuan, a year-on-year increase of 27.

5%; East China (Liqun era) achieved revenue 4.

62 trillion, expected 1.

04 billion.

In terms of different business types, department stores have achieved main revenue14.

580,000 yuan, an annual increase of 3.

22%; the supermarket realized main income of 15.

580,000 yuan, an increase of 31 in ten years.

24%, it is estimated that the supermarket business in the original Shandong area overlaps.

4%; home appliances achieve main income3.

32 ppm, a ten-year increase of 9.

06%.

As for the number of stores, the company still had 87 stores at the end of 1Q19 (one for each switch).

The company’s gross profit margin steadily increased, and its expansion across regions expanded its sales management expense ratio. The company’s comprehensive gross profit margin was 23 in 1Q19.

4%, increase by 1 every year.

69pp; of which the gross profit margin of the main retail business is 17.

85%, an increase of 3 per year.

72pp.

Company sales management expenses expense 17.

66%, an increase of 4 a year.

05pp; financial expenses 0.

8%, 0 per year.

3pp.

Taken together, the net interest rate for 1Q19 was 2.

7%, down 2 every year.

3pp.
Earnings forecast and investment advice The company is rooted in Qingdao and radiates Shandong and has a solid foundation.

The acquisition of Lotte stores accelerates cross-region expansion. Rich brand resources and a strong supply chain system will ensure the success rate of cross-region expansion.

Under the private mechanism, employees directly hold over 30% of the company’s equity, providing incentives.At the same time, the company plans to issue convertible bonds to raise funds of 1.8 billion US dollars for the construction of three commercial complexes and supply chains in Shandong. It is estimated that the company will achieve a net profit of 2 in 19-21.

6 billion, 4.

2 billion, 5.

60,000 yuan, the company is expected to return to the mother’s net profit compound growth rate of 40% in the next three years, given the company’s 27X PE 19 years, the corresponding PEG is 0.

68, corresponding to a reasonable value 杭州夜网论坛 of 8.

13 yuan / share, maintaining the overweight rating.

Risk reminders: the risk of falling inventory prices; increased competition risks; cross-regional operating risks.