Rainbow Group (002419): Years of in-depth cultivation and polishing of multi-format operations and digital capabilities leading department stores start a new stage of extension and development

Rainbow Group (002419): Years of in-depth cultivation and polishing of multi-format operations and digital capabilities leading department 天津夜网 stores start a new stage of extension and development

Key investment points The company’s top and bottom incentive mechanisms are in place to create an efficient learning organization.

(1) The actual controller of the company is a merger of shareholders of the SASAC.

At the same time, despite the background of state-owned assets, the company merged in 2002 to hold the shares of Tianhong through an investment company; the existing core executives had a limited number of coexisting shares, which provided sufficient incentive.

At the same time, the company’s leaders are young and trained by the company.

(2) At the same time, the company also implements an “excess profit sharing mechanism” for grassroots employees to share profits with basic employees. At present, more than 90% of stores have participated.

(3) The company is committed to creating a learning organization structure with short decision-making processes and high communication efficiency to ensure efficient operation.

Multi-format operators ‘strong retail capabilities, leading industry digital capabilities, and foundry companies’ core competitiveness.

(1) Multi-format strong retail capability and leading performance in the industry.

The company has 68 department stores / malls / supermarkets in 18/13/81 in 18 years, and department store / supermarket revenue accounts for about 60% / 30%.

The multi-format operation capabilities make the company’s performance more stable than its department store counterparts.

From the perspective of each subdivision industry, the company has repeatedly proven its ability to create multiple styles of department stores and shopping malls in different types of locations according to local conditions; at the same time, through the construction of its own supply chain, it has continued to create its ownThe core competitiveness of supermarkets.

(2) The company has fully promoted digitization and has become a digital benchmarking enterprise in the early days of department stores.

The company digitally obtains and analyzes customer data from the front desk (18 million online members), and online and offline Unicom services (Tianhong Dajia accounts for 7 of supermarket revenue).

6%), the digitization of store products (90% in supermarkets and 20% in department stores), the digitization of mid-back office operations and the intelligent selection of supply chain all-round advancement ensure the company’s comprehensive service to customers and continuous improvement of operational efficiency.

At the same time, the company began to realize the realization of digital services.

In 18 years, the company ushered in the golden period of extended development, and its self-built + asset-light model expanded rapidly.

The company started a new round of expansion cycle in 18 years: (1) Benefiting from excellent retail capabilities, the company’s requirements for the maturity of shopping centers in shopping malls are relatively reduced, so that it can expand rapidly at an alternative cost.

The company’s shopping malls / department stores are expected to increase at a double-digit rate in the next few years.

(2) There are only four shopping malls opened by the company 17 years ago. The maturity of new shopping malls in recent years is also expected to be the driving force for the company’s growth.

(3) In addition to self-construction, the company also accelerated the expansion of light asset expansion in the mode of franchising / management output.

Financial analysis: The gross profit margin has gradually increased, and the account has abundant cash.

(1) The gross profit margin increased with the increase in the proportion of leasing business, driving the company’s net profit margin to increase.

The company’s high gross profit margin leasing business area gradually replaced the associate business. With the increase in retail sales, the increase in gross profit margin will gradually increase the profit margin and net profit. The company’s retail net profit has maintained a growth of about 30% in the past two years.

At the same time, with the increase in the conversion mall / supermarket ratio, we expect the company’s performance stability to continue to increase.

(2) The company has abundant cash on its books, with net cash and wealth management exceeding 7 billion, and a large amount of cash comes from payables and advance receipts carried forward in daily operations.

At the same time, the company’s 18-year net operating cash flow exceeded 20 billion.

Investment advice and profit forecast: We expect the company to maintain a double-digit annual increase in the number of shopping malls / department stores under the circumstances of self-built and light asset expansion in the next few years; the merger and acquisition of supermarkets and convenient expansion, the number of company stores is expected to continueincrease.
At the same time, the maturity of the second new store is also expected to provide revenue growth for the company.

We expect the company to return its net profit to its parent in 19-2110.

4/12.

1/14.

0 billion, the growth rate is 15% / 16% / 16%, corresponding to PE 15/13 / 11X.

Although the company’s valuation is higher than its peers, in consideration of the performance growth rate of its reconstruction and the continuously enhanced performance stability brought by the expansion of shopping malls / supermarkets, it is given a “Buy” rating for the first time.

Risk reminders: 1. Less than expected expansion in different locations; 2. Less than expected retail environment; 3. Technical progress