DS(600694) Huaxin Securities·2024-12-19 00:56Investment Rating - The report assigns a "Buy" rating for the company, indicating a positive outlook for investment opportunities [2][8]. Core Insights - The company is adapting its business model to innovate and diversify its retail operations, focusing on a multi-format retail strategy that includes department stores, supermarkets, and appliance chains [2][6]. - The appointment of Chen Deli as the new CEO is expected to drive the company's transformation and upgrade efforts, leveraging his extensive experience in commercial real estate management [2][6][8]. - The company has shown resilience in profitability, with a net profit of 531 million yuan in the first three quarters of 2024, reflecting a year-on-year increase of 17.99% despite a revenue decline [2][6]. Summary by Sections Business Performance - In the first three quarters of 2024, the company achieved a revenue of 5.288 billion yuan, a decrease of 6.82% year-on-year, while the gross margin was 41.35% and net margin was 11.00%, both showing improvements [2][6]. - The company has a stable dividend policy, with a dividend yield of 5.92% in 2023, and the payout ratio reached 56.34% of net profit attributable to shareholders [2][6]. Management Changes - The new CEO, Chen Deli, previously expanded New City Holdings from 11 to over 156 shopping centers, indicating his capability to drive significant growth [6][8]. - The company is expected to enhance its operational efficiency and profitability through strategic adjustments in its business model and store management [6][8]. Market Strategy - The company is focusing on optimizing its product offerings and enhancing customer experience through the introduction of unique brands and improved store layouts [6][7]. - The Daqing New Mart model has shown success and is likely to be replicated in other locations, contributing to overall sales growth and margin improvement [7][8]. Financial Forecast - Revenue projections for 2024 to 2026 are estimated at 7.186 billion, 7.376 billion, and 7.492 billion yuan respectively, with corresponding EPS of 1.88, 2.02, and 2.18 yuan [8][10]. - The current price-to-earnings ratio is projected to decrease from 13.3 in 2024 to 11.4 by 2026, indicating potential for value appreciation [8][10].