YONGHUI SUPERSTORES(SH:601933) Shanxi Securities·2025-09-11 09:44Investment Rating - The report assigns an "Accumulate-A" rating to the company, marking its first coverage [6]. Core Views - The company is a leading national chain supermarket that is firmly advancing its quality retail transformation. It has experienced rapid growth in revenue, store count, and net profit from 2010 to 2019, with compound annual growth rates of 23.9%, 21.7%, and 19.9% respectively. However, it faced operational losses starting in 2021 due to various market pressures and has since committed to a quality retail strategy [1][16]. Summary by Sections Company Overview - The company began in 1998 and pioneered the "Agricultural Reform Supermarket" model. It expanded rapidly, reaching 911 stores by 2019. However, it has faced challenges since 2021, leading to a net store closure trend and a total loss of 9.502 billion yuan from 2021 to 2024 [1][16][22]. Store Transformation - The company is actively transforming its stores, with a target of reaching 200 remodeled stores by the end of September 2025 and 300 by early 2026. As of August 15, 2025, 160 remodeled stores were operational [1][28]. Product Layout - The company is optimizing its product structure by significantly updating its inventory, with over 60% of products being new. It is focusing on high-margin categories such as baked goods and ready-to-eat meals, with a notable increase in sales during the 2025 Spring Festival [32][37]. Supply Chain Reform - The company is shifting from a traditional KA model to a cost-plus procurement model, enhancing its product differentiation. It is also establishing a central kitchen to ensure product quality and stable supply [47][49]. Service Improvement - The remodeled stores are equipped with various customer service facilities, enhancing the shopping experience. Employee wages have also increased significantly, with a focus on improving employee satisfaction and retention [53][56]. Industry Overview - The supermarket industry in China is characterized by stable growth, with the top 100 supermarket companies projected to achieve a sales scale of approximately 900 billion yuan in 2024, reflecting a year-on-year growth of 0.3%. The industry is undergoing a transformation, with many companies focusing on store remodeling as a key strategy for 2025 [2][6].