Yonghui Supermarket (601933) First Coverage Report: National Supermarket Leader: New Milestones, New Growth

High-growth national supermarket leader.

Yonghui’s fourth national market share in 2018 (3.

9%), the market share has steadily increased; in 2018, the scale of revenue exceeded 70 billion, with a total of 708 stores and ROE7.

65%.

Since the company’s listing (2010-2018), the compound growth rate of revenue has been 24.

37%, the compound growth rate of net profit attributable to mothers 21.

80%, maintaining a long-term stable growth capacity.

The foundation of Yonghui’s efficient operation lies in the partnership system.

The advantage of Yonghui’s organizational structure lies in the innovative application of the partner mechanism and the horse racing mechanism. The partners actively seek to maximize the individual and collective value under the incentive of profit distribution.

The partner mechanism uses independent management to stimulate small teams to improve performance, and the horse racing mechanism is used to promote the experience replication and iterative upgrade of store management, ensuring the vitality of the entire organizational structure.

At the end of the 18th, Yun created a table, adjusted its structure, and focused on the main business of the supermarket.

Yonghui made major adjustments to the internal structure at the end of 2018. Yunchuang and Yunshang’s statement will help the company’s income statement to reduce losses while strengthening the focus on the traditional main business sector.The modern governance structure of the company is more clear. A large supply chain division and a large science and technology data department have been set up in the middle and back offices to promote the improvement of management efficiency.

With fresh characteristics as a traffic entrance, it helps to expand in different places.

Yonghui’s freshness characteristics 北京男士spa会所 have been widely recognized by consumers, improving Yonghui’s entry into new regions.

Efficient supply chain and refined management enable Yonghui’s fresh produce to achieve high quality and low prices, and the price is 20-30% lower than the surrounding farmer’s markets, becoming the core of gathering customers for Yonghui’s regional expansion.

Yonghui’s fresh produce accounts for 45%, which is much higher than the general supermarket’s 20%, increasing store passenger flow and boosting store floor efficiency.

The new format Yonghui mini focuses on the fresh potential of the community.

In 2019, Yonghui focused on the main business of the supermarket and opened a new format Yonghui mini. The advantage of community freshness lies in the small format and high flexibility. The mini is more grounded in display and operation.

It is expected that Yonghui mini will benefit from Yonghui’s fresh food management and brand effects, and has a large growth space. In the next three years, it will be based on a large supermarket store radiating 2-3 mini stores and opening space of 2000-2400.

Profit forecast and investment advice: We believe that the company, as a national supermarket leader, has strong long-term growth, covering it for the first time, and gives it an “overweight” rating.

The company’s revenue is expected to be 874 in 2019-2021.

90/1076.

35/1287.

37 trillion, with a growth rate of 24.

07% / 23.

02% / 19.

61%; net profit attributable to mothers is 23 respectively.

36/27.

28/36.

28 trillion, a growth rate of 57.

8% / 16.

8% / 33.

0%; EPS is 0.

24/0.

29/0.

38 yuan.

According to Yonghui’s high growth, its estimate is basically in a reasonable range.

Assume that Yonghui Supermarket will bring double increase in revenue and profitability through the continuous strengthening of scale effects, and benchmark the specific proportion levels of global retail giants Wal-Mart and Costco. We believe that Yonghui’s leading attributes and high growth will enjoyA certain premium, and its relative estimate range is 9.29-12.

00 yuan / share.

Risk reminders: Consumption boom is declining, same store growth is weak; Yonghui mini’s new business expansion is not up to expectations; industry competition is intensifying.