Hongqi Chain (002697) 2019 Third Quarterly Report Review: Main Business, Xinnet Bank’s Earnings Accelerate Season by Quarter

Hongqi Chain (002697) 2019 Third Quarterly Report Review: Main Business, Xinnet Bank’s Earnings Accelerate Season by Quarter
The company’s main business is located in the harvest period after high-speed expansion. There is ample exhibition space in Chengdu and inland-level cities in the province; digitalization enables the optimization of categories, M & A 9010 strengthens catering operations, strengthens internal control management, and promotes profitability to increase quarterly; Xinwang Bank is still in a rapid growth stage. Revenue and net profit growth accelerated.2019Q1-Q3 The company realized operating income / attributable net profit 58.900 million / 4.1 ‰, ten years +7.8% / + 58.7%; of which the operating income / attributable net profit for the third quarter of 2019 were 20 respectively.600 million / 1.7 trillion, ten years +11.6% / + 67.5%.Affected by the increase in labor costs, store rents, expenses and other expenses, the company’s net operating cash flow from the first quarter to the third quarter of 2019 was 51.14 million yuan, totaling -87.8%. The main reason for the increase in revenue growth was high growth in same-store stores, faster store expansion, and consolidation of 9010 supermarkets.In the third quarter of 2019, the same-store growth rate was estimated to be about 4%.According to the company’s official website data, as of 2019/10/13, the company has opened a total of 3,028 stores, and it is estimated that the Q3 company will increase its net increase of about 70 stores and increase the number of exhibition stores (2018A / 2019H1 exhibition stores 146/168). The 9010 supermarket acquired by the company is located in a mature store. It is estimated to exclude the impact of the consolidation of the 9010 supermarket. In 2019Q3, the company’s revenue is about + 8%?+ 9%. In the main business, Xinnet Bank’s earnings accelerated quarter by quarter.2019Q1-Q3 Xinnet Bank, which holds 15% of the company’s shares, achieved net profit8.40,000 yuan, contributing investment income1.3 ppm; 2019Q1 / Q2 / Q3 Xinwang Bank contributed investment income of 26.51 million / 45.35 million / 55.92 million yuan (2018A 55.29 million yuan) respectively.Excluding the investment income contributed by Xinwang Bank, the company’s main business in Q1 to Q3 achieved net profit2.800 million, +27 a year.3%; of which the net profit attributable to the main business in 2019Q3 was approximately 1.1 ‰, +30 a year.6% (Q1 / Q2 in 2019 increased by +15 respectively.2% / + 30.4%). Affected by the promotion, the gross profit margin decreased slightly, and the internal control of sales expense 杭州桑拿 ratio was strengthened to -1.00pct.Affected by the increase in Mid-Autumn promotion in the summer, the company’s gross profit margin in Q3 2019 decreased by -0.12pct to 29.72%.The company strengthened internal control, and the sales expense ratio in Q1 2019 was half a year.00pct to 21.59%.The cost of media publications and the 70th anniversary of the founding of the People’s Republic of China increased, and the management expense rate of the company in Q3 2019 increased by +0.35pct to 1.59%. Enabling technology to strengthen freshness, Chengdu and the provincial-level cities in the province to accelerate the exhibition.The Red Flag Cloud Big Data platform facilitates accurate site selection, product selection, and marketing to further improve efficiency.The company continues to promote in-depth cooperation with Yonghui Fresh,杭州桑拿 and plans to increase its stores after the renovation by 20%?30%, it is estimated that by the end of 2019, the number of fresh stores will reach 300; the company acquired 9010 supermarkets to replace the meal board.The company has accelerated the development of stores in large Chengdu and inland-level cities in the province. It is estimated that it will initially display about 300 stores. Risk factors: Expansion of new stores, fresh food business progress is less than expected; industry competition intensifies. Investment suggestion: Consider the consolidation of 9010 supermarkets and raise the company’s 2019-2021 operating income forecast to 78.200 million / 82.900 million / 87.700 million (was 76).8 billion / 80.8 billion / 85.500 million), maintaining the attributable net profit forecast to 5.200 million / 6.8 billion / 8.7 trillion, corresponding to EPS 0.38/0.50/0.64 yuan, maintain “Buy” rating.