Will Gao Xin Retail Eventually Become Internet Giant?

The parent company -

(6808.HK) recently announced its first quarter results in 2017, operating income and net profit rose slightly.

However, the increase in income mainly depends on the expansion of stores, and the same store income is still in a state of decline. Under this influence, the retail price of Gao Xin dropped by about 8% and the market value evaporated 5 billion 700 million Hong Kong dollars between the two days of a quarterly announcement.

At present, the market value of Gao Xin's retail business is nearly cut off from its peak in 2013.

In fact, Gao Xin's retail sales are quite solid. Its sales network still has strategic position in the tide of retail alliance between the Internet giants and offline businesses. It is a role that can not be ignored.

In February of this year,

Rumour has it that Gao Xin's retail may be a curve of the Internet giant, stimulating stock prices soaring, but eventually denied.

One of Gao Xin's retail competitors, Yonghui supermarket, after Jingdong's stake in the company, its financial performance improved significantly, and its share price rebounded sharply after the initial downturn.

As one of the largest independent assets in China's business super field, will Gao Xin retail eventually become Internet giant?

Shang Chao's life is not easy, and the same store's income drops.

Gao Xin retail 2017 first quarter results show that the company's operating income of 31 billion 617 million yuan, an increase of 2% over the same period, net profit of 1 billion 41 million yuan, an increase of 1.5% over the same period last year.

Big Rand and Auchan are Gao Xin's two largest retail brand.

Since its entry into the Chinese mainland market in 1998, the sales volume of Da Yun FA has increased year by year.

After 2009, its sales volume surpassed the retail partners such as Carrefour, WAL-MART and so on, becoming a super brother in the mainland market chain.

But in 2015, Gao Xin's retail profits plummeted, even in 2016, but still less than before.

According to the earnings report, net profit in 2016 was 2 billion 571 million yuan, a decrease of 11.59% compared with 2014. Net profit in the first quarter of 2017 decreased by 11.7% compared with the same period in 2014.

Gao Xin's retail business in recent years has been developing rapidly: Flying bull network and Putian network are still in a state of loss, dragging their legs behind.

Gao Xin's retail sales are still growing, but the growth is mainly from dot expansion (38 new stores in 2016), while same store sales are still on the decline.

Huatai Securities Research Report shows that the same store revenue continued to decline in the first two months of 2017, while the same store sales fell 0.34% in 2016 and 3.6% in 2015.

Another phenomenon that can not be overlooked is that the market has basically been cut off under the competition of business super enterprises for many years.

Even if dot outlets continue to expand, the growth rate of Gao Xin's retail sales is slowing down.

Its operating revenue growth has been decreasing year by year since 2010, and its annual revenue growth has dropped from 23.7% to 4.27% in 2016.

Gao Xin's retail tree alone branch Yonghui supermarket and Jingdong cooperation results show

Jingdong shares Yonghui supermarket undoubtedly brought pressure to Gao Xin retail.

The core index of Gao Xin's retail business has been better than Yonghui supermarket for a long time. After Jingdong's stake in the company, this situation has changed.

According to the Research Report of Huachang securities, Gao Xin retail sales increased by 38 stores last year, and the market share increased from 7.6% to 7.8% in 2016.

And Yonghui supermarket, in 2016, the number of stores increased 105 to 487, the total number of anti Gao Xin retail.

The market share increased from 2.2% to 2.8%, and the growth rate was more obvious.

Gao Xin's retail asset liability ratio is also higher than that of Yonghui supermarket. At the end of the first quarter of 2017, the total liabilities were 33 billion 690 million yuan, and the asset liability ratio was 58.49%.

In contrast, Yonghui supermarket had a 32.67% asset liability ratio in the first quarter, while Jingdong was 58.24% before the end of 2014.

In terms of market value, after the stock price continued to decline, the total market value of Gao Xin's retail sales has been greatly reduced.

In 2013, Gao Xin's total retail market value exceeded HK $120 billion.

When the share price was the lowest in the first quarter of last year, the market value fell below 40 billion Hong Kong dollars.

There has been a rebound in the past few months, but the current total market capitalization is about 65 billion 800 million Hong Kong dollars, still at a high level.

Yonghui supermarket's share price fell sharply after Jingdong's stake in the stock market, and then soared. As of May 11th, its total market capitalization was more than 58 billion yuan, which was equivalent to HK $65 billion 500 million, which was almost the same as that of Gao Xin.

At the same time, Gao Xin retailing has been lagging behind in Yongshang's market adjustment.

Over the past two years, sales of large boutiques have been sluggish, and small boutique stores have been praised.

According to the world clothing and shoe net, Gao Xin's retail sales last year, two small stores HI:Auchan and RH:lavia performed well last year, the company plans to open more small stores, and as an opportunity to return to the first tier cities.

And plans to open two or three cosmetic stores.

By the end of 2016, Yonghui supermarket had opened 99 BRAVOYH small boutiques.

Who is the real Gao Xin retailer?

Despite the pressure on profits, Gao Xin retail is still a relatively high quality asset compared with the recent downturn in the business sector.

The first is the huge private stores.

By the end of 2016, there were 446 hypermarkets in Gao Xin retail, 31% of which were owned property stores.

And sunning cloud more than 1510 stores, 29 of their own property, accounting for less than 2%.

By the end of 2016, only 233 of the 233 main stores of Yonghui supermarket (Fujian and Chongqing) were private stores, accounting for only 3.43%.

Gao Xin's retail store resources are also quite abundant.

By the end of June 2016, through the signing of the lease or acquisition of plots, it has identified 79 locations and opened a comprehensive hypermarket, of which 69 are under construction.

By measuring the number of newly added stores in 2016, this will ensure its expansion in the next 2 years.

Second, the core indicators such as single store sales, Ping efficiency and net assets yield have declined, but they can still be maintained at a relatively high level.

According to the earnings data, last year, the total retail sales of Gao Xin retail sales was about 226 million, although it has declined compared with the previous years, but it is still a very high standard in the business super field.

The market has been expecting that Gao Xin's retail may be bought and sold by the Internet giant, and any blow up will cause a sharp reaction.

In February 17th of this year, Gao Xin retail and Alibaba, Tencent and Suning to discuss the acquisition of the news spread on the Internet.

In the afternoon, Gao Xin suspended retail sales. Before the suspension, the stock price was HK $8.88, up 6.49%.

Previously, another retail giant, BELLE international, has announced privatization, valuing privatization at HK $53 billion 100 million.

In terms of assets, Gao Xin retailing is actually better than BELLE international.

Earlier, Ali's stake in Yintai business and subsequent privatization of Yintai were in the ups and downs of stock prices, which benefited many investors.

Gao Xin's retailing actually falls to anyone.

If you want to sell it, sell it earlier.

More interesting reports, please pay attention to the world clothing shoes and hats net.