Suning Tesco (002024): Net profit performed well in the first half of the year
On the evening of July 11, Suning Tesco issued a forecast for the first half of 2019. Suning Tesco is expected to realize a net profit attributable to shareholders of listed companies of 21 in the first half of 2019.00 ppm?twenty three.One million yuan.In the first half of the year, the net profit brought 南京夜生活网 by Suning Xiaodian’s operating restructuring and equity allocation increased. The company’s net profit attributable to shareholders of the listed company is estimated to be 8.70,000 yuan?10.700 million.Because the company sold part of Alibaba shares in the same period last year, the net profit was RMB 56.Affected by this, the reported change in net profit attributable to shareholders of the listed company of the consolidated company was -65.02%?-61.69%. Operating analysis The completion of the replacement of Suning’s small stores has brought a significant boost to net profit.According to Suning’s first quarter report for 2019, the company’s net profit attributable to shareholders of listed companies in the first quarter was 1.3.6 billion, in the second quarter Suning Tesco’s net profit attributable to its mother was 19.64 ppm?twenty one.6.4 billion, a significant rebound from the previous month; meanwhile, net profit attributable to mothers after the sale of Ali’s equity in the first half of 2018 was 4.0.2 million yuan, the annual growth is expected to be 422% in 2019?472%.We are gradually in a relatively excessively weak situation in the external development environment, and the completion of the small store shows that the company as a whole is beginning to seek the possibility of strategically advancing steadily.The replacement of small shops will also help the company to focus on its main business, reduce subsequent capital expenditures, and expand financing channels, which will help rapid marketization. The external environment has a positive trend.On June 9, 2019, the National Development and Reform Commission, the Ministry of Ecology and Environment, and the Ministry of Commerce jointly issued the “Implementation Plan for Promoting the Update and Upgrade of Key Consumer Products and Smoothing the Recycling of Resources (Implementation Plan for 2019-2020)” to gradually promote the replacement of home appliances and consumer electronics.Encourage consumers to update and eliminate the expected high and poorly safe home appliances, and give appropriate support to consumers in purchasing energy-saving and smart home appliances.We think the release of the plan is relatively good news for Suning. We remain cautiously optimistic about Suning’s long-term profit and cash flow levels.At present, Suning’s form of maintaining profit growth mainly relies on asset divestiture and investment income. Non-net profit deduction is not optimistic. The company’s non-net profit deduction in 2017 and 2018 were -0.9 ppm / -3.600 million.With strategic focus, optimization of resource allocation and improvement of operating efficiency, net profit and cash flow levels can be expected. Investment recommendations We maintain the company’s adjusted EPS for 2019-21 to 0.35/0.50/0.72 yuan, corresponding to 19-21 years P / E is 32x / 22x / 15x, maintain “Buy” rating. Risk Tips 1) The effect of strategic adjustment and landing is lower than expected 2) The channel costs are high and the supplier relationship is unstable 3) The asset integration and synergy effects are lower than expected