Hongqi Chain (002697): 2Q19 revenue increased by 9%, net profit of main business increased by 30%, endogenous extension increased significantly

Hongqi Chain (002697): 2Q19 revenue increased by 9%, net profit of main business increased by 30%, endogenous extension increased significantly
Hongqi Chain released its 2019 semi-annual report on August 19: the first half of 2019 achieved operating income of 38.29 ppm, a five-year increase of 5.89%; total profit 2.61 trillion, an increase of 46 in ten years.39%; net profit attributable to mother 2.370,000 yuan, an increase of 52 in ten years.93%, net of non-attributed net profit2.3 ppm, an increase of 48 in ten years.twenty one%.The diluted EPS is 0.17 yuan, return on equity 8.71%. Net operating cash flow budget during the reporting period was -0.01 yuan. Brief comments and investment recommendations. The company’s operating income in the first half of 2019 increased by 5.89%, of which the first and second quarters each increased by 2.69%, 9.2合肥夜网2%; net profit attributable to mothers in the first half of the year 2.3.7 billion increased by 52.93%, of which Xinwang Bank contributed investment income of 70 million yuan, net profit of the main business1.67 ppm increased by 25%, of which the main business net profit in the first and second quarters increased by 15% and 30% respectively. The high elasticity of the main business net profit in the second quarter was mainly due to the increase in revenue and the decline in expense ratios. 1. In the first half of the year, there were 168 new stores opened, 27 closed, and a total of 2958 stores. The speed of exhibition was significantly higher than the same period in 2018 (66 new and 31 closed); more than 90% of the company’s leased properties, the average single storeAn area of 182 square meters.We estimate that there will 深圳SPA会所 be a net increase of about 60 or 80 stores in the first and second quarters.The company adheres to the strategic development thinking of “taking Sichuan as the center and Chengdu as the core”, accelerating market development, further deepening the network layout, and consolidating and enhancing the leading advantages of the convenience supermarket industry in Sichuan. 2. Revenue for the first half of the year 38.2.9 billion growth5.89%, of which the first and second quarters each increased by 2.69%, 9.twenty two%. We estimate same-store growth of 4% in the first half of the year and accelerated growth in the second quarter.Comprehensive gross profit margin increased by 1 in the first half of the year.7 points to 30.22%, of which the first quarter and the second quarter each increased by 2.5, 0.85pct, we think mainly from strengthening direct mining, optimizing inventory management and settlement models. (A) Divided into categories, revenue of daily necessities 6.10,000 yuan, down by 0 every year.49%; tobacco and alcohol income 10.11 ppm, a five-year increase of 5.06%; food revenue 19.10,000 yuan, an increase of 7 in ten years.64%, with the exception of daily necessities, the growth rate of various categories was relatively stable. (B) By region, the main urban area realized income21.2.8 billion, accounting for 60 of main income.59%, an annual increase of 6.14%; Suburban county district income 12.5.2 billion, accounting for 35 of main revenue.65%, an increase of 4 per year.71%; secondary urban income 1.32, accounting for 3.77%, an increase of 0 a year.8%.Revenue from other businesses increased 11.48% to 3.1.6 billion. 3. In the second quarter, the sales expense ratio decreased by zero.28pct, during which the rate of expense is reduced by 0.38 points.The sales expense ratio increased by 0 in the first half of the year.66 single to 22.99%, mainly due to the increase in store-related expenses; sales expense ratio in the second quarter of 21.54%, a reduction of 0 per year.92pct; the management expense ratio increased by 0 in the first half of the year.44 points to 1.78%, mainly due to the increase in the company’s media press expenses and depreciation booth expenses; in the second quarter realized financial income of 280,000 yuan, in the first half of the financial expenses of 3.38 million yuan, a decrease of 3.34 million yuan.During the first half of the year, the expense ratio increased by 1 pct to 24.86%, of which the expense ratio increased by 2 during the first quarter.4pct, while the second quarter dropped 0.38 points. 4. The improvement in gross profit margin and the investment income contributed by Xinwang Bank increased net profit attributable to mothers in the first half of the year by 52.93%.In the first half of the year, the company’s 15% stake in Xinwang Bank contributed about 70 million yuan in net investment income, compared with only 21.63 million yuan in the same period in 2018. In the first and second quarters, it contributed 26.51 million and 43.52 million yuan each.93% to 2.3.7 billion, net profit increased by 48.21% to 2.300 million.We estimate that after excluding the investment income of Xinwang Bank, the net profit of the main business in the first half of the year increased by 25.19% to 1.6.7 billion. Profit growth in the second quarter increased significantly from the previous quarter.In the first and second quarters, net profit attributable to mothers increased by 45 each.71%, 56.At 84%, we calculated that after excluding the investment income of Xinwang Bank, the net profit of the main business in the first and second quarters increased by 15% and 30% respectively. The high elastic growth of the net profit of the main business in the second quarter mainly benefited from the increase in revenue and the decline in expense ratios. Maintain judgment of the company.The company is a leader in Sichuan convenience stores, with both growth and efficiency.(1) Growth: ① Large space: The company has a high market share in Chengdu convenience stores and ample space for sinking in the province; ② Successful mergers and acquisitions experience: Acquisition of Hongyan in 2015, mutual benefit, Leshan Universal, 1H19 to acquire 9010 supermarket.(2) Efficiency: ① Endogenous efficiency improvement after integration: Ping efficiency, human efficiency, net interest rate and other low points in 2015-16, rebounded in 2017-2018, we expect to continue in 2019; ② create “freshness + convenience””Sample: We expect the company to renovate 300 fresh stores in 2019; ③ Xinwang Bank has made significant profits since 2018, and we believe that it is expected to continue to contribute investment income to the company. Update profit forecast.It is expected that the net profit attributable to mothers will be 4 each in 2019-2021.500 million, 5.200 million, 5.70,000 yuan, an increase of 40 in ten years.5%, 15.1%, 8.7%, EPS is 0 each.33 yuan, 0.38 yuan, 0.42 yuan; of which the main business net profit is 3.200 million, 3.700 million and 4.200 million US dollars, an annual increase of 20%, 17%, 12%, investment income increased rapidly, 70 million yuan in the first half, is expected to be 1 per year.3.5 billion, one each in the next year.500 million. In the first half of the year, investment income accounted for 30% of the parent’s net profit, which was significantly higher than before. Therefore, the segment estimation method was adopted.Taking into account the company’s “convenience + fresh” business format, large growth space, layout of the private banking cross-border financial industry, the ownership of a certain estimated premium, given the main business in 2019 25-30 times PE, investment income 5x PE (corresponding to 1.12-1.32 times PS), giving a total of 6.35-7.The reasonable value range of 52 yuan maintains the investment rating of “Continuous Market”. Risk reminders: rising rents; uncertainty of store integration and management complexity after a large number of openings; increased competition; uncertainty of investment income