Yuyuan Garden (600655): The main business of gold and jewellery has been restructured to accelerate the completion of a significant increase in company performance
The event company released its 2018 annual report: the company achieved revenue of 337 in 2018.7.7 billion, an increase of 97.4%; net profit attributable to mother is 30.21 trillion, with an increase of 331.38%.Excluding the merger factors under the same control, the company’s 2018 revenue / net profit attributable to mothers increased by 7 respectively.twenty four.67%. The company plans to pay dividends for every 10 shares2.7 yuan (including tax), the total amount of cash dividends is 10.48 billion yuan (including tax), accounting for 34% of net profit attributable to mothers in 2018.69%. A brief comment on the acceleration of the development of the main business of gold and jewellery. Restructuring and thickening the company’s revenue and performance. In 2018, the company’s revenue / attribution to net profit increased by 97.4% / 331.38% to 337.7南京夜网7/30.21 trillion, gross margin increased by 5.6 pct to 25.72%, the company’s performance slightly exceeded our expectations.The significant improvement in performance and gross profit margin has improved the thickening brought about by the previous department reorganization and injection of high-quality assets. In terms of business, the growth rate of the main business of gold and jewelry has bucked the trend.Revenue in 2018 was 166.77 ppm, an increase of 14 in ten years.66%, an increase of 7.7% over 2017.46 points.As of the end of 2018, the company had a total of 2,090 gold and jewelry chain sales outlets, a net increase of 137 compared to 2017, of which 181 were direct-operated stores, and 1,909 were franchising and distributing outlets.The gross profit margin of gold and jewellery (net of taxes and surcharges) decreased by 0 from 2017.54 pct to 6.93%. We expect that the decrease in gross profit margin of direct sales will be mainly due to the increase in the proportion of wholesale sales with a lower gross profit margin and the adjustment of the structure of direct stores.In terms of sales model, the retail business still achieved positive growth under the drastic adjustment of directly operated stores, and its operating income increased.08% to 34.8.3 billion; wholesale business revenue increased in ten years.16% to 131.9.4 billion, an increase in the proportion of gold and jewelry business revenue compared to 20172.35 pct to 79%, the gross profit margin of the wholesale business benefited from the improvement of the product structure and an increase of 0.6 pct to 4.97%. The cultural and commercial sector is generally stable, with resorts and restaurants leading the way.Affected by the renovation and upgrade of Songhe Tower and Nanxiang Steamed Bread Store, the catering business achieved revenue in 20186.6.2 billion, an annual increase of 15.41%; Japan’s Club Med Hoshino Hotel opened in December 2017, driving the company’s 2018 resort revenue to increase significantly by 41.3% to 8.2 billion US dollars; the pharmaceutical business was affected by the implementation of the new medical reform two-vote system, and revenue once replaced 22.29% to 3.3.3 billion.With the continuous upgrading of Yuyuan’s overall business district image, continuous optimization and upgrade of products and brands, the company’s cultural and commercial advancement has maintained a steady development trend. The property development and sales business formed a thickening of performance.In 2018, the company’s property development and sales realized revenue of 146.97 ppm, gross margin is 29.58%.This part of the company’s business is mainly high-quality real estate projects injected by the reorganization, which has significantly increased the company’s revenue and performance. In the future, it will form synergy with the company’s gold jewelry, cultural business and other businesses. The expense ratio has dropped, and profitability has increased during the company’s 2018 expense ratio of 9.26%, a decrease of 1 from 2017.14 pct. The decrease was mainly due to the restructuring completed in the second half of 2018.The sales expense ratio decreases by 0 every year.43 pct to 3.58%; the management expense rate drops by 0 every year.57 pct to 4.57%; financial expense ratio drops by 0 every year.12 pct to 1.12%.Driven by the increase in gross profit margin and the decline in expense ratio, the company’s 2018 net sales margin decreased by 3.82 pct to 10.13%. In 2018, the company’s inventory turnover days increased by 164 days to 243 days; accounts receivable turnover days increased by more than 3 days to 8 days; and accounts receivable turnover days increased by 22 days to 32 days per year.The company’s net operating cash flow was 75 in 2018.US $ 7.7 billion, a previous substantial increase of 581%, mainly due to the restructuring injection of real estate project sales. The dividend payout ratio has increased, making the cake bigger while actively giving back to shareholders the company intends to pay dividends every 10 shares2.7 yuan (including tax), the dividend payment rate in 2018 increased by 3 compared with 2017.9 pct to 34.At 7%, the dividend yield is about 3%. While the company’s business scale and operating capacity continue to improve, the company actively returns to shareholders, allowing shareholders to fully own the cake to increase profits.The increase in the company’s dividend payment rate also shows the company’s confidence in the future development prospects. Launched the second phase of the partner budget incentive plan, expanded the scope of incentive targets, and formed a long-term mechanism5.4 million copies, involving about 0% of the company’s total share capital.139%, the exercise price is 9.09 yuan / share, the exercise conditions are 2020/2021/2022 EPS not less than 0.85/0.9/0.95 yuan / share, or 2020/2021/2022 return to the net profit attributable to the mother at a compound growth rate of not less than 12%, incentive costs of about 18.55 million yuan, planned to be amortized within 6 years.The second phase of the budget incentive plan is the same as the first phase of the exercise conditions. The scope of the incentive objects is expanded from the company’s headquarters to the merger of the subsidiaries. The introduction of the two incentive plans not only demonstrates the company’s firm confidence in long-term development, but also reflects Fosun’s consistent commitment.The partner culture of the company is of great significance for the company to establish a deliberative mechanism for the partner group, to stimulate the entrepreneurial spirit of talents, to form a community of destiny that plays a decisive role in the development of the company, and to form an effective long-term incentive for the partners. The gold and jewelry dual-brand strategy has continued to upgrade, and good products + channels have ample room for sinking. Under the background of the pressure of the consumer environment in the second half of 2018, the company’s jewelry business growth has increased against the trend, with H2 being about 24%, except for the slight increase in the price of gold.In addition to the driving force, the acceleration in gold jewelry revenue shows that the company’s brand and development strategy are highly competitive.The “Old Temple Gold” and “Yayi Jewelry” brands that the company belongs to adopt differentiated positioning and development strategies to form a benign situation of dislocation development: The old temple adopts a strategy of upgrading and maintaining product quality and brand premium.Dimension-reducing strategy, improving cost performance to meet mass consumer demand, accelerating channel sinking to seize the vast market of low-tier cities.In the future, the company’s “good product” strategy will continue to advance, channels will sink, and the speed of exhibitions will increase. The gold and jewelry business is expected to continue to maintain double-digit growth. Invest in power to upgrade the industry and upgrade the technology-led model.In 2018, the company acquired Suzhou Songhelou to strengthen its existing time-honored brand, acquired Shanghai Jinyuge to expand the commercial space around Yuyuan, and acquired IGI’s strategic layout of the jewelry industry.Chain, helping the transformation and growth of jewelry fashion.The company established a C2M and technology innovation office in 2018 to design and formulate a C2M strategy that can be implemented.The company merged to complete the membership system construction of 4.3 million registered members and 800,000 consumer members; added C-side entrances such as Ali Smart Store, Lao Temple Gold Franchisee Platform; combined the jewelry fashion sector to create “good luck treasure” products, which are gold jewelry accessoriesInitially the first mobile mutual benefit network innovation platform, has now served more than 800 franchise stores. Investment suggestion: The rebound in gold prices and stabilization and consumption upgrades in low-tier cities are good for domestic gold consumption, and the company ‘s gold and jewellery dual-brand strategy is fully upgraded; the company ‘s business culture sector relies on Yuyuan Mall ‘s multi-business collaboration and steady development.Good.In 2018, the company’s reorganization was completed, high-quality land resources brought cash flow to the company, the major shareholder Fosun Group was fully empowered, employees under the partner culture, and executive incentive capabilities, and the company’s fundamentals continued to improve.We estimate the net profit attributable to mothers to be 33 in 2019-2021.9, 38.0, 42.700 million, EPS is 0.87, 0.98, 1.1 yuan / share, corresponding to PE of 10X, 9X, 8X, maintaining the “overweight” level. Risk factors: Marginal growth rate of household consumption declines; gold prices fluctuate greatly; real estate market policy adjustments; increased industry competition