YONGHUI SUPERSTORES(SH:601933)2024-11-06 10:21Investment Rating - The report maintains an "Outperform" rating for Yonghui Superstores, with a target price of RMB 6.40, representing a potential upside of 60% [7][15]. Core Viewpoints - The supermarket industry is currently facing challenges due to channel diversion, deflation, and declining consumer spending. However, leading companies like Yonghui possess advantages in fresh supply chains. The ongoing transformation efforts are expected to yield positive results in the future [7][14]. - The company has made significant progress in its strategic transformation, including the appointment of new senior management to enhance home delivery and logistics operations [12][13]. Financial Performance Summary - In Q3 2024, Yonghui reported revenue of RMB 16.80 billion, a decrease of 16.4% year-on-year. The net profit attributable to shareholders was RMB -353 million, with a diluted EPS of RMB -0.04 and a return on equity (ROE) of -5.91% [12][14]. - For the first three quarters of 2024, total revenue was RMB 54.55 billion, down 12.14% year-on-year, with a gross margin of 20.84%, reflecting a decrease of 0.79 percentage points [2][8]. - The company experienced a decline in same-store sales due to reduced customer traffic and the closure of underperforming stores, leading to a total of 2 new stores opened in Q3 2024 [2][4]. Strategic Initiatives - Yonghui is accelerating its strategic transformation, having completed the renovation of 10 stores by the end of Q3, with significant revenue increases reported from these locations. The company plans to expand the number of renovated stores to approximately 40-50 by the upcoming Spring Festival [4][14]. - The company is focusing on developing its private label products, with revenue from private brands reaching RMB 1.5 billion, accounting for 2.75% of total sales [6][14]. Earnings Forecast - The updated earnings forecast for Yonghui indicates projected revenues of RMB 69.90 billion, RMB 72.60 billion, and RMB 77.70 billion for 2024, 2025, and 2026, respectively, with year-on-year growth rates of -11.2%, 3.9%, and 7.1% [7][15]. - The forecasted net profit attributable to shareholders for the same period is expected to be RMB -806 million, RMB 355 million, and RMB 670 million, reflecting significant recovery in profitability [15].