Suning Tesco (002024): Net profit in the first half of the year after excluding the previous and one-off factors of small stores8.7-10.7 billion

Suning Tesco (002024): Net profit in the first half of the year after excluding the previous and one-off factors of small stores8.7-10.7 billion
Predicted profit declines by 65% -62% year by year. Suning Tesco released the 2019 semi-annual performance forecast. It is expected to realize net profit attributable to its mothers of US $ 2.1-2.3 billion, which is a decrease from the net profit of US $ 6 billion in the same period last year.Thick net profit of 5.6 billion US dollars and the strategic replacement of the Suning store in the first half of the year. If it replaces the disposable income of Suning Store in the first half of the year, the company expects to return to its net profit in the first half of the year.7-10.7 trillion, which is better than the operating net profit of 4 trillion in the same period last year, basically in line with expectations. Focus point 1. The semi-annual performance was dragged down by the strategic tilt of Suning’s small stores, but after excluding this effect, operating profit has improved.1) Revenue: In the first half of the year, the company continued to promote the development of all-scenario retail, speed up the development of communities and rural markets, and especially emphasized the improvement of non-electrical product business capabilities. However, due to the macro environment, we expect the company’s offline same store growth may still face pressureAt the end, we expect the growth rate to be 25-30%; 2) Profit side: the main reason for the profit change in the first half of the year: the sale of Ali’s equity in the same period last year increased the net profit of US $ 5.6 billion and brought a high base.We estimate that it will affect about 2.1-2.2 billion) and distribution (thickening one-time income) 34.28 ppm). If the above factors are taken into account, the company expects to realize net profit attributable to mothers in the first half of the year.7-10.7 trillion, better than the operating profit of 4 trillion in the same period last year.The distribution of Suning Store has been completed at the end of June, and it will not be consolidated in the future. Looking forward, we expect the scale effect and the improvement of the fast-moving consumer operation capacity, and the company’s profitability will promote steady improvement. 2. Build an omni-channel smart retail service provider, department store, and fast-moving consumer goods to accelerate the layout.At this stage, Suning focuses on the strategic positioning of smart retail service providers, strengthens the product aggregation and traffic acquisition capabilities, accelerates the distribution of outlets endogenously, accelerates the capture of low-end markets and community markets, and has successively acquired Wanda Department Store, Carrefour China, and rapidly improved department stores.The core capabilities of FMCG categories, customer acquisition capabilities and category synergies are expected to further improve. 3. The company has entered the stage of expected rapid growth in all channels, and has been re-selected as the best.Continuous logistics infrastructure construction and supply chain 夜来香体验网 optimization help the company form core competition barriers.We are optimistic about the company’s development prospects, and prioritize: 1) omni-channel and multi-scenario collaborative interactions to help the company continue to seize market share; 2) use the effect of scale to optimize the product structure and value-added services, and continue to improve profitability. Estimates and recommendations maintain earnings forecasts. Current expectations correspond to 2019e6.8xP / E and 0.3xP / S. Maintain Outperform rating. Based on the company’s acquisition target and pin-for-purchase, small shops and other businesses are still in the growth stage. The target price is reduced by 8% to 15.6 yuan, corresponding to 2019e10xP / E and 0.4xP / S, 49% space. Risks The macro economy continues to decline; industry competition is intensifying.