Group 1 - The core event "717 Good Eating Festival" was successfully held by Yonghui Supermarket, featuring over 100 new products and quality goods, leading to a significant sales increase of 75% in remodeled stores during the event [1][2] - The sales report highlighted that fresh food categories, particularly shrimp and fruits, became the top shopping choice for consumers, with Fuan grapes seeing a sales increase of over 100 times [2][3] - Yonghui's partnership with Yili for a competitively priced fresh milk product resulted in sales exceeding 1 million yuan within four days of launch, indicating strong potential for becoming a billion-level product [2] Group 2 - The remodeling of Yonghui Supermarket's stores has entered a scalable and systematic phase, with plans to open one remodeled store daily on average in the third quarter [2] - As of July 23, there are 136 remodeled stores nationwide, with significant sales growth observed in both first and second-tier cities, as well as rapid growth in some third and fourth-tier cities [2][3] - The company aims to continue its remodeling efforts, targeting 208 remodeled stores by the end of September 2023 and 300 by the Lunar New Year in 2026 [3]

Investment Rating - The report assigns an "Accumulate" rating to Yonghui Supermarket (601933) for the first time [1]. Core Viewpoints - Yonghui Supermarket is a leading chain supermarket in China, ranking second in sales in 2023 with a revenue of 85.55 billion yuan, following Walmart China [5][13]. - The company is undergoing significant reforms, including a comprehensive store renovation strategy inspired by the "Pang Donglai model," which aims to enhance operational efficiency and improve profitability [5][61]. - The strategic investment from Miniso has accelerated the company's transformation, with plans to complete renovations on approximately 200 stores by 2025 while closing 250-350 underperforming stores [5][61]. Summary by Sections 1. Company Overview - Yonghui Supermarket was established in 2001 and has rapidly expanded, becoming a benchmark for integrating fresh produce into modern supermarkets [13]. - The company has faced challenges due to the pandemic and competition from online retail, leading to a reduction in store numbers and a focus on cost control [13][14]. 2. Investment Highlights - The company has initiated a comprehensive reform since June 2024, focusing on employee compensation, store layout, product restructuring, and supply chain optimization [5][37]. - The "Pang Donglai model" has been adopted to enhance customer experience and operational efficiency, with significant improvements in store performance observed post-renovation [5][74]. 3. Financial Performance - The company's revenue has declined from 93.20 billion yuan in 2020 to 67.57 billion yuan in 2024, with a net loss of 1.465 billion yuan in 2024 [17]. - Despite short-term losses due to store closures and renovations, the long-term outlook is positive as operational efficiency is expected to improve [5][17]. 4. Market Position and Competitive Landscape - Yonghui Supermarket's sales in 2023 were 85.55 billion yuan, a 12.7% decrease year-on-year, while competitors like Walmart and emerging brands like Hema and Pang Donglai have shown growth [34]. - The shift towards quality and consumer experience is driving the transformation of traditional supermarkets, with Yonghui adapting to these market demands [26][30]. 5. Strategic Changes and Future Outlook - The company plans to complete the renovation of 200 stores by 2025, with a focus on enhancing product quality and customer service [61][74]. - The strategic investment from Miniso is expected to further support Yonghui's transformation and operational improvements [61].

Core Viewpoint - Yonghui Supermarket is facing significant losses in the first half of 2025, with a projected net profit attributable to shareholders of -240 million yuan, compared to a profit of 280 million yuan in the same period of 2024 [1] Group 1: Store Renovation and Performance - As of mid-July 2025, Yonghui Supermarket has completed renovations on 132 stores, accounting for approximately 25% of its total stores, with plans to exceed 178 renovated stores by the end of August 2025 [4] - The company has closed 227 underperforming stores in the first half of 2025, leading to costs associated with lease compensation, personnel compensation, and asset write-offs [2][4] - The renovation of stores based on the "Pang Donglai model" has shown positive short-term effects, with significant increases in customer traffic and sales in newly renovated stores [5][7] Group 2: Financial Performance and Losses - In the second half of 2024, the company reported a loss of approximately 1.74 billion yuan, continuing into the first half of 2025 [5] - The company is undergoing a major transformation, with a goal to complete renovations on over half of its stores by the Lunar New Year in 2026 [4][5] Group 3: Management Changes - In March 2025, a new board of directors was formed, with significant representation from Miniso, which became the largest shareholder by acquiring 29.4% of Yonghui Supermarket [7][8] - The CEO position remains vacant following the resignation of Li Songfeng in March 2025, with the reform leadership group currently acting in this capacity [8]

Core Viewpoint - Yonghui Supermarket has publicly declared a war against corruption and hidden rules, emphasizing integrity as a core value and the foundation of cooperation with suppliers [1]. Group 1: Measures Against Corruption - Yonghui Supermarket will implement a comprehensive supervision mechanism, encouraging suppliers and the public to participate in monitoring for a fair business environment [2]. - Strict penalties will be enforced for confirmed cases of corruption, including legal accountability for involved personnel and termination of partnerships with implicated suppliers [3]. - Protection for whistleblowers will be ensured, with all reports kept confidential and any form of retaliation strictly prohibited [4]. Group 2: Supplier Entry and Cooperation - Yonghui Supermarket has established a unified entry point for supplier applications, requiring all submissions to be made through the official website or designated QR codes, prohibiting any private recommendations by employees [6]. - The company promises efficient responses, with cooperation applications being addressed within 24 hours and all processes being fully online to eliminate human interference [6]. - A quality ecosystem will be built, focusing solely on quality standards and collaborating with suppliers to establish a quality management system throughout the supply chain [6]. Group 3: Financial Settlement Commitments - Yonghui Supermarket commits to timely payments, adhering strictly to contract terms and ensuring accurate payment processes [7]. - A dedicated financial settlement hotline will be established for suppliers, providing immediate online payment options and rapid response to inquiries within 24 hours [8]. Group 4: Performance and Store Transformation - As of now, Yonghui Supermarket has completed the transformation of 128 stores under the "Fat Donglai" model, with significant sales growth compared to pre-transformation levels [8]. - The company reported a revenue of 67.574 billion yuan for the previous year, a year-on-year decline of 14.07%, and a net loss of 1.465 billion yuan, which increased by 10.26% year-on-year [8]. - For Q1 2025, Yonghui Supermarket achieved a revenue of 17.479 billion yuan, down 19.32% year-on-year, with a net profit of 148 million yuan, a decrease of 79.96% [8]. - The company aims to complete the transformation of 200 stores by September 30 this year, focusing on employee training and enhancing product structure to strengthen its private label offerings [9].

Core Viewpoint - Yonghui Supermarket has publicly declared a war against corruption and hidden rules, emphasizing the importance of integrity and transparency in its supply chain operations [2][4]. Group 1: Integrity and Cooperation - Integrity is a fundamental value for Yonghui Supermarket, and any form of corruption or fraud will ultimately increase supply chain costs and damage the interests of both parties involved [5]. - The company has established a comprehensive supervision mechanism and encourages suppliers and the public to participate in monitoring to maintain a fair business environment [5]. - Strict penalties will be enforced for verified misconduct, including legal accountability for involved personnel and termination of partnerships with corrupt suppliers [5]. - Yonghui Supermarket guarantees the confidentiality of whistleblower information and prohibits any form of retaliation against them [5][6]. Group 2: Supplier Onboarding - Yonghui Supermarket opposes any form of favoritism or "backdoor" dealings, requiring all suppliers to submit cooperation applications through the official website or designated QR codes [5][13]. - The company ensures a unified entry point for supplier applications, promoting fair competition and prohibiting any employee recommendations [5][13]. Group 3: Financial Settlement - Yonghui Supermarket commits to timely payments to suppliers, adhering strictly to contract terms and ensuring accurate payment processes [8][13]. - A dedicated financial settlement hotline has been established to provide immediate online payment services and quick resolution of complex issues [8]. Group 4: Performance and Future Plans - As of now, Yonghui Supermarket has completed the transformation of 128 stores under the "Fat Donglai" model, with significant sales growth compared to pre-transformation levels [13][14]. - The company reported a revenue of 67.574 billion yuan for the previous year, a decline of 14.07%, and a net loss of 1.465 billion yuan, which increased by 10.26% year-on-year [13]. - In the first quarter of 2025, revenue was 17.479 billion yuan, down 19.32%, with a net profit of 148 million yuan, a decrease of 79.96% [13]. - The company aims to complete the transformation of 200 stores by September 30 of this year, focusing on enhancing employee skills and product quality [14].

Core Insights - Yonghui Supermarket has officially opened its first self-reformed store in the city's sub-center, marking a significant expansion in its store format [1] - The number of reformed stores nationwide has reached 81, with a target of 150 by the end of July and 300 before the Lunar New Year in 2026 [1] Store Features - The new store includes a dining area with offerings such as soda, ice cream, and hot dogs, along with facilities for on-site dining [1] - Customer convenience features include disposable utensils at checkout, a health service area with blood pressure and height measurement tools, seasonal tea drinks, and free charging stations [1] - Store layout improvements include wider aisles of 4 meters, uniform shelf heights of 1.6 meters, and the removal of mandatory traffic flow [1] Product Offerings - The store combines direct supply from Yonghui farms with seasonal products, enhancing customer choices [2] - A dedicated brand area showcases products like craft beer, yogurt, and laundry pods, catering to upcoming holidays with specially selected items [2] Employee Welfare - The store has improved employee conditions by providing dedicated seating for cashiers and weighers, as well as new rest and changing rooms [2] - Employee compensation has increased by approximately 30%, with average working hours capped at 8 hours per day and 10 days of paid annual leave after one year of service [2]

Core Viewpoint - The incident of "reverse rounding" at Yonghui Supermarket has raised significant public concern, leading to a company-wide policy change to ensure customer payments do not exceed marked prices [3][11]. Group 1: Incident Overview - Yonghui Supermarket acknowledged the existence of "reverse rounding" practices in several non-adjusted stores across Chongqing, Hebei, and Beijing, confirming customer complaints about the Chongqing Jinyuan Times store [3][8]. - The company implemented a new policy on April 29, mandating that cash payments round down to the nearest whole number, ensuring that customers pay no more than the marked price [3][11]. Group 2: Customer Complaints - A customer reported being charged 8 yuan for a product marked at 7.96 yuan due to the store's rounding policy, which was not disclosed prior to checkout [8][11]. - Systematic instances of this rounding practice were found across multiple stores in Chongqing, with various products being charged higher than their marked prices [8][11]. Group 3: Legal and Ethical Implications - The practice of "reverse rounding" is considered potentially illegal as it deprives consumers of their right to be informed and to engage in fair transactions [11]. - The incident reflects a lack of integrity and legal awareness among some businesses, highlighting the importance of consumer rights [11]. Group 4: Financial Performance - Yonghui Supermarket reported a revenue of 67.57 billion yuan for 2024, a year-on-year decrease of 14.07%, and a net loss of 1.465 billion yuan, which is an increase in losses compared to the previous year [12]. - For Q1 2025, the company recorded a revenue of 17.48 billion yuan, down 19.32% year-on-year, with a net profit of 148 million yuan, a significant decline of 79.96% [12].

Core Viewpoint - The company reported a significant decline in revenue and net profit for Q1 2025, indicating ongoing challenges in its operations and profitability [1][2]. Financial Performance - In Q1 2025, the company achieved revenue of 17.479 billion yuan, a year-on-year decrease of 19.32%, and a net profit attributable to shareholders of 148 million yuan, down 79.96% year-on-year [1]. - The company's comprehensive gross margin for Q1 2025 was 21.50%, a decrease of 1.35 percentage points compared to the previous year [1]. - The period expense ratio for Q1 2025 was 20.78%, an increase of 1.38 percentage points year-on-year, with specific expense ratios for sales, management, R&D, and finance reported as 16.63%, 2.45%, 0.24%, and 1.46% respectively [2]. Operational Adjustments - The company has been implementing store adjustments and optimizing online channels since 2024, completing modifications in 61 stores by April 25, 2025, which resulted in significant increases in revenue and customer traffic [2]. - The company has also been closing underperforming stores, with a total reduction of 273 stores by the end of Q1 2025 [2]. Profit Forecast Adjustments - The profit forecast for 2025 has been revised down by 81% to 5.9 million yuan, while the forecast for 2026 has been increased by 5% to 38.3 million yuan, and a new forecast for 2027 is set at 55.6 million yuan [3]. - The company maintains an "overweight" rating due to expected improvements from store adjustments and the clearing of underperforming stores [3].

Investment Rating - The investment rating for the company is "Buy" (maintained) [3] Core Views - The company is a stable profit generator within the department store sector, with a low PE valuation, PB under 1, and a dividend payout ratio of 50%. Recent adjustments have led to a rapid increase in performance. The new leadership and ongoing reform plans are expected to enhance profit margins, with net profit forecasts for 2025-2027 set at 649 million, 716 million, and 768 million respectively, reflecting year-on-year growth of 10.74%, 10.37%, and 7.17% [3][8] - The company reported a revenue of 6.95 billion in 2024, down 5% year-on-year, while net profit increased by 16% to 586.2 million. The first quarter of 2025 saw a revenue of 1.925 billion, a decrease of 8% year-on-year, with net profit slightly up by 0.7% [8][3] - The company is focusing on optimizing its operational structure, which has led to an increase in profit margins. In Q1 2025, the gross margin and net profit margin were 44.8% and 15.0%, respectively, showing improvements compared to the previous year [8][3] Financial Performance Summary - The total revenue forecast for 2023 is 7.331 billion, with a slight increase of 0.75% year-on-year. However, a decline is expected in the following years, with projections of 6.949 billion in 2024, 5.867 billion in 2025, and further decreases in 2026 and 2027 [3][8] - The company plans to distribute a cash dividend of 10 yuan per 10 shares, resulting in a dividend rate of 54%, which corresponds to a dividend yield of 3.8% based on the closing price on April 25 [8][3] - The company has been closing underperforming stores to optimize its store structure, resulting in a reduction in the number of department and supermarket stores, which has impacted revenue but improved profitability [8][3]

Core Viewpoint - The company aims to significantly reduce losses in the short term and quickly achieve a stable and healthy profit status [1] Group 1: Company Performance - The chairman noted that the sales of the reformed stores have significantly increased, with sales growth meeting the company's expectations [1] - The current focus is on completing the reform of existing stores and optimizing underperforming locations before expanding to new stores [1] - There is no specific target for the number of new stores, as this will depend on the progress of the overall company reform [1] Group 2: Industry Context - The company acknowledges the considerable pressure within the overall industry, with many players actively undergoing reforms [1] - The chairman expressed optimism about the future, indicating a belief in positive outcomes despite current challenges [1]