Suning Tesco (002024): Sales scale grows faster, gross margin improves

Suning Tesco (002024): Sales scale grows faster, gross margin improves
Event: The company achieved revenue of 622 in the first quarter of 2019.40,000 yuan, an increase of 25 in ten years.4% (Main business income increased by 25 in ten years.6%), net profit attributable to mother 1.4 ppm, an increase of 22 in ten years.2%. The gross profit margin remained stable, and the expense ratio increased slightly during the period: (1) the adjustment of the commodity structure and the optimization of the supply chain improved the gross profit margin.In Q1 2019, gross profit margin decreased by 0.47pp to 15.9%, +0.9pp, an improvement of 18 years earlier.(2) Staff costs and warehousing expenses increased, and the amortization of employee shareholding plan expenses resulted in an increase in operating expense ratio by +1.5%.Expense rate increased by 1 during Q1 2019.9pp to 17.3%.The sales expense ratio increased by 1.3pp to 13.2%, the management expense rate rose by 0.19pp to 3.1%, the financial expense ratio rose by 0.41pp to 0.8%, mainly due to the increase in bank borrowings and the provision of bond indexes. Improve the omni-channel layout and promote the development of all-scenario retail.The total number of Q1 company stores in 2019 is 1.20 thousand (self-operated 9,758, joined 2571), a net increase of 877.(1) Suning Tesco Plaza: The company operates 17 Suning Tesco Plazas, 8 reserve projects, and 1 new operating square.(2) Suning stores: The company has a total of 5,098 Suning stores and Diya Tiantian self-operated stores, 72 Diya Tiantian franchised stores, 930 new stores opened, and 1,046 contracted reserves.(3) Suning Tesco Retail Cloud: The company has 4,805 retail cloud stores (2306 directly-operated stores and 2,499 franchise stores), a net increase of 366 (-62 directly-operated stores; 428 franchises).(4) 3C home life specialty stores: The company has 2116 specialty stores, including 427 cloud stores, 1666 regular stores (86 flagship stores, 1181 community stores, 399 center stores), and 23 county stores.(5) Red children, Su Xiansheng: There are 163 mothers and infants of red children and 9 Su Xiansheng supermarkets, with a net increase of 6 and 1 respectively. The sales scale maintained rapid growth, and the logistics and financial business steadily improved.(1) Sales scale: The sales volume (including tax) of the company’s products in Q1 2019 was 869.3 ‰, +25 a year.4%.The scale of online platform commodity transactions is 541.2 ppm (tax included), +36 for ten years.1%, of which the scale of self-operated goods sales was 379.1 ppm (tax included), +40 for ten years.9%, the scale of open platform commodity transactions was 162.200 million (including tax).(2) Logistics and financial business: In Q1 of 2019, Suning Logistics and Tiantian Express have a total area of 9.64 million square meters of warehousing and related ancillary facilities, and express network 2.70,000 logistics networks covering 351 prefecture-level 杭州夜生活网 cities across the country.Consumption quota for consumer finance business is +229 per year.7%, the supply chain finance business investment amount + 78% per year. Profit forecast and rating.It is expected that net profit attributable to mothers will be 154 in 2019-2021.200 million, 36.700 million, 42.200 million, the EPS is 1.66 yuan, 0.39 yuan, 0.45 yuan, corresponding PE is 8/33/29 times.Considering that the company is still at the stall, the “overweight” level is maintained during the channel sinking process. Risk reminder: market risk, foreign exchange risk, store expansion speed is not up to expected risk.