红旗连锁：业绩短期承压，结构优化进行时-20250421

Investment Rating - The report maintains an "Accumulate" rating for the company with a target price of RMB 6.55 [8][9]. Core Views - The company's performance is under short-term pressure due to weak downstream demand and intensified industry competition, with 2024 revenue at RMB 10.12 billion (yoy -0.09%) and net profit at RMB 0.52 billion (yoy -7.12%) [1]. - The company is undergoing structural optimization, focusing on cost control, asset optimization, and digital upgrades in the supply chain, which may enhance its medium to long-term growth potential [1][4]. - The company has seen a shift towards lower-tier markets, with significant growth in the tobacco and alcohol categories, indicating a strategic pivot in its market approach [2]. Financial Performance - The gross margin for 2024 slightly decreased by 0.3 percentage points to 29.4%, primarily due to increased promotional activities and cost pressures [3]. - The net profit margin also declined by 0.4 percentage points to 5.2%, reflecting the overall impact of macroeconomic challenges on performance [3]. - In Q1 2025, the company reported revenue of RMB 2.48 billion (yoy -7.17%) and a net profit of RMB 0.16 billion (yoy -4.15%), showing resilience in core business profitability [1][3]. Operational Insights - The company is expected to benefit from government initiatives aimed at boosting consumption, positioning it favorably as a leading retailer in Southwest China [4]. - The change in the controlling shareholder to the Sichuan State-owned Assets Supervision and Administration Commission is anticipated to leverage synergies with local enterprises, marking a new development phase for the company [4]. Earnings Forecast and Valuation - The net profit estimates for 2025 and 2026 have been adjusted downwards by 11.6% and 8.3% to RMB 0.55 billion and RMB 0.60 billion, respectively [5]. - The report assigns a price-to-earnings (PE) ratio of 16 times for 2025, reflecting the ongoing transformation of the company's operations [5].