Hongqi Chain(SZ:002697) Jing Ji Guan Cha Wang·2025-08-09 07:57Core Viewpoint - Red Flag Chain (002697.SZ) reported a revenue decline of 7.3% year-on-year for the first half of 2025, marking the first time since its listing in 2012 that the company experienced a drop in mid-year revenue [2][3]. Financial Performance - The company achieved a revenue of 4.808 billion yuan in the first half of 2025, down from the previous year [3]. - The net profit excluding non-recurring items was 262 million yuan, an increase of 8.63% year-on-year [3]. - The net cash flow from operating activities was 414 million yuan, a decrease of 4.85% year-on-year [3]. - Earnings from investments in joint ventures, specifically New Network Bank, contributed 72.83 million yuan, accounting for 22.32% of total profit [3]. Company Background - Red Flag Chain operates approximately 3,600 stores and originated from a local state-owned enterprise [4]. - The founder, Cao Shiru, transitioned from a state enterprise to establish Red Flag Chain in 2000, leading to its listing in 2012 as the first convenience supermarket on the A-share market [4]. Expansion Attempts - In 2020, Red Flag Chain attempted to expand outside Sichuan by forming a joint venture in Gansu Province, aiming to open 50 stores by the end of 2020 and 500 stores within three years [4][5]. - However, this expansion strategy faced challenges and was ultimately deemed unsuccessful, with the company announcing the transfer of its stake in the Gansu joint venture in 2024 [5]. New Retail Strategies - The company has been exploring new retail formats, including live streaming and O2O (online-to-offline) models, to boost performance [5][6]. - Despite these efforts, the impact of the new retail strategies on revenue has been limited, with 2023 revenue showing only a 1.12% increase and a slight decline in 2024 [6]. Shareholder Changes - Red Flag Chain underwent significant changes in its shareholder structure, with state-owned Sichuan Investment taking control after a share transfer from major shareholder Yonghui Supermarket [7][9]. - Following the change in control, there were management changes, but the company maintained its operational strategies [7]. Market Opportunities - The company is focusing on the rapid development of the county economy to strengthen its market presence and is preparing to establish distribution centers to enhance supply chain capabilities [8].