YONGHUI SUPERSTORES(601933) 东吴证券·2024-11-19 23:29Investment Rating - The report assigns an "Accumulate" rating to Yonghui Supermarket, indicating a positive outlook for the stock [1][149]. Core Insights - Yonghui Supermarket is one of the largest chain supermarket groups in China, with a reported operating scale of 85.55 billion yuan in 2023, second only to Walmart [2][80]. - The company has faced operational pressure in recent years, with a significant decline in revenue and profitability, but recent adjustments in store management and operations show promise for recovery [2][3][4]. - The supermarket industry is experiencing a turning point as the impact of the pandemic wanes and competition from e-commerce and new retail formats stabilizes [2][96]. Summary by Sections Company Overview - Yonghui Supermarket is currently the largest chain supermarket group in China, with a 2023 operating scale of 85.55 billion yuan, ranking second after Walmart [2][80]. - The company has seen a decline in operational performance, with a 21% drop in sales per square meter since 2019, and a reported revenue of 78.64 billion yuan in 2023, down 12.71% year-on-year [2][82]. Operational Improvements - The company is implementing store modifications inspired by successful peers, with 13 modified stores opened as of November 8, 2023, and plans to reach 40-50 by early 2025 [3][4]. - The closure of unprofitable stores has reduced the total number of stores from 1,000 at the beginning of 2024 to 804 by October 2024, which is expected to improve long-term profitability [4][93]. Industry Context - The supermarket sector has lagged behind e-commerce and overall retail growth, with compound annual growth rates of 3.6% for supermarkets compared to 12.1% for e-commerce from 2019 to 2023 [2][96]. - The decline in community group buying subsidies has provided a respite for traditional supermarkets, allowing for gradual recovery in profitability [2][99]. Recent Developments - Yonghui is learning from successful competitors like Pang Donglai, with significant improvements in customer traffic and sales in modified stores, achieving sales increases of up to 8-10 times in some locations [3][4][121]. - The planned acquisition of a 29.4% stake by Miniso is expected to enhance Yonghui's private label capabilities and operational efficiency [4][126][131]. Financial Forecasts - The report forecasts a net profit for Yonghui Supermarket of -5.2 billion yuan in 2024, with a recovery to 2.7 billion yuan in 2025 and 5.6 billion yuan in 2026, reflecting year-on-year growth rates of 61%, 152%, and 109% respectively [4][144]. - The projected P/E ratios for 2025 and 2026 are 146 and 70, respectively, indicating a potential for significant valuation improvement as operational adjustments take effect [4][146].