21 Hard Core Investment And Research: Red Star Macalline'S "Restructuring" And "Reassessment": How Effective Is The "First Brother" Of Home Retailing In Light Of Assets, Operation And Leverage Reduction?

As the leading enterprise of domestic home furnishing chain stores, red star Macalline delivered a financial report with net profit increasing by 84% year-on-year in the first quarter of this year.

This data is consistent with the strategic adjustment of "light assets, heavy operation and lower leverage" of Red Star Macalline, which seems to confirm the effectiveness of the new strategy.

In terms of capital keywords, in May this year, red star Macalline's application for non-public offering of about 3.7 billion yuan was approved by the CSRC; During the same period, the third phase of ESOP was formally implemented.

The road that Macalline will take is more and more worthy of attention.

Cost reduction and efficiency increase = competitiveness of main business?

The improvement of Macalline's performance is mainly due to the improvement of the epidemic situation and the continuous improvement of external business environment, which lays the foundation for Red Star Macalline to achieve a significant year-on-year rebound this year.

This is also a beautiful first quarter financial report of Red Star Macalline in 2021 after shouldering the epidemic pressure in 2020.

In the first quarter of 2021, red star Macalline achieved revenue of 3.341 billion yuan, a year-on-year increase of 30.70%, net profit of 722 million yuan, a year-on-year increase of 83.79%, deducting non net profit of 413 million yuan, a big increase of 101.45%.

In terms of business, in the first quarter, the company has opened a self-supporting shopping mall, with a revenue of 1.951 billion yuan, a year-on-year increase of 31.7%.

Among them, the revenue of self owned shopping malls and rental shopping malls reached 1.592 billion yuan and 292 million yuan respectively, with a year-on-year increase of 34.8% and 30.8%. In terms of regions, the operating revenue of self operated shopping malls in Central China and Chongqing increased significantly by 64.1% and 46.2% respectively year-on-year.

One detail of the financial report is that the profitability of each mall of Macalline has been improved.

In the first quarter of this year, the gross profit margin of Red Star Macalline's self operated stores increased by 0.8 percentage points;

In addition, in 2020, Macalline's home decoration sector achieved 115% revenue growth.

As the "first business" of Red Star Macalline, home decoration has shown growth momentum.

The road that Macalline will take is more and more worthy of attention. Materials and pictures

In terms of cost control, from January to March 2021, Macalline's financial expenses decreased by 12.6% year on year, creating space for profit growth.

After a careful study of the strategic layout measures of Red Star Macalline in recent years, it is not difficult to find the reason why the company's performance growth in the first quarter of 2021 is so strong, which is inseparable from the multiple measures such as accelerating digital layout, innovating and upgrading marketing services and organizational empowerment.

As early as 2012, red star Macalline entered the e-commerce market with a low profile, and in the development process of nearly 10 years, it has upgraded from the traditional offline retail field to the online and offline traffic field of radiation line.

Different from other retail consumer goods, the home furnishing industry is a non-standard, low-frequency, high-order market, focusing on scene, service and decision-making, which determines that offline physical channels are irreplaceable.

As the leading household retail enterprise in China, red star Macalline's new retail layout fully considers the characteristics of the home furnishing industry, takes the lead in creating the online and offline retail mode in the industry, and establishes the first digital shopping mall in China's home furnishing industry, so as to promote the digital transformation of the industry.

In May 2019, red star Macalline signed a new strategic cooperation agreement with Alibaba to carry out cooperation in the construction of new retail stores and logistics warehouse allocation, and then the intra city station of tmall was launched.

"Same city station" is more than flow entrance

"Intra city station" is a new retail mode of home furnishing jointly created by red star Macalline and Alibaba through strategic cooperation.

Taking the city as a unit, the official flagship store of Red Star Macalline is built on tmall Taobao, that is, the same city station of tmall. Behind each city station are several red star Macalline offline shopping malls in the city, supporting offline consumption, experience, distribution, after-sales services in the city.

This model echoes the corporate strategy of "re operation" of Red Star Macalline, accurately outlines the characteristic path of Red Star Macalline on the new home retail Road, and also shows the blueprint of Red Star Macalline's comprehensive digital upgrading.

Behind the online and offline retail mode in the same city is red star Macalline's determination to promote the digital transformation of the home furnishing industry, that is, to carry out digital construction on all offline shopping malls of Red Star Macalline, and help all brands and dealers to carry out the construction of online operation positions, including product online, marketing online, service online, management online, etc.

The market generally interprets "city station" as "new flow entrance", that is, the channel for attracting customers of traditional stores. However, the digitization of the people and goods yard behind the same city station is the panorama of Red Star Macalline's "digital new infrastructure".

According to the 21st Century Capital Research Institute, red star Macalline has cooperated with Alibaba cloud team to build the largest data platform and aggregation delivery platform in the home decoration and home furnishing industry, aiming to integrate big data of both sides, and realize the whole domain precision investment & private domain fine operation.

"The essence of new retail is the reconstruction of people goods market. The digitalization of stores is equivalent to the digitization of stores. The new digital infrastructure of Red Star Macalline also includes the digitization of goods, that is, the digital modeling of pictures and details of commodities; People are the digitalization of users, including the digitization of global marketing platform, that is, conducting all-round digital marketing in public domain and private domain, and mining more user needs Chen Donghui, executive president of Red Star Macalline home group and general manager of new retail center, told 21st century economic reporter.

At present, these digital upgrading initiatives have begun to bear fruit.

By the end of June 2021, 271 shopping malls in 159 cities of Red Star Macalline have realized the upgrading and transformation of digital stores; 73 Red Star Macalline shopping malls in 28 cities were launched into the same city station of tmall.

In 2020, the annual total flow of tmall's urban stations will exceed 55 million, and the flow of core commodities will reach 33.14 million, ranking first in the industry.

In the same year, red star Macalline conducted more than 67000 live broadcasts on tmall Taobao platform, and the total transaction amount of the whole area reached 15.152 billion yuan during the double 11 period. In 2021, the digital advantage of Red Star Macalline is more obvious. In the first half of this year, red star Macalline has obtained 4.56 million traffic in Taoxi public domain, which is close to the traffic scale of last year. In 618 this year, red star Macalline also achieved a total turnover of 8.63 billion yuan, of which the online guided sales volume reached 2.74 billion yuan, and became the first brand in the history of tmall's super product day with a turnover of more than 1 billion yuan.

Connotation of "light" and "heavy"

Red Star Macalline's digital transformation road is only one part of its practice of "light assets, heavy operation" strategy.

In the field of heavy operation, in addition to online and offline integration, Macalline is also making efforts to integrate the industrial chain of home decoration. It established the decoration industry group in 2019 to promote the integration of home decoration and home furnishing.

In 2020, red star Macalline officially announced to upgrade home decoration to "the first business".

From the traditional home store to a new direction of home furnishing integrated supply chain integration, the company develops the "second growth curve".

In terms of business coverage and brand layout, the decoration industry group has constructed a matrix formation, with more than ten sub brands penetrating different regions and levels of markets, with the intention of creating an ecological industrial chain.

The background is that the market space of China's home furnishing market has reached trillions, among which the renovation of old houses and the decoration demand of new houses jointly promote the steady growth of the market.

In recent years, with the improvement of urbanization level, the enhancement of residents' consumption ability and the younger consumers, the growth space of Omni channel Pan home platform service providers is expanding rapidly.

"The first tier cities have entered the second-hand renovation era of existing houses. We believe that the home furnishing industry will certainly surpass the real estate industry and become the largest consumer industry." Red Star Macalline home group executive president and general manager of large operation center Zhu Jiagui said.

Asset light is the core strategy of Red Star Macalline's rapid penetration into cities at all levels, and it is also an important step to gradually realize the role transformation from "landlord" to "housekeeper".

"In the past few decades, we have been rapidly occupying the core position of each primary market through the way of weight and weight. Among them, self built shopping malls occupy the commanding heights of various shopping malls. In the past ten years, the cost of rent has risen rapidly. With the development of the market, we began to shift to asset light strategy from last year, that is, to reduce the proportion of self operated shopping malls by promoting the development speed of entrusted shopping malls on a large scale. " Zhu Jiagui said.

These shopping malls are mainly concentrated in the sinking market and supplementary market. Through this layout, the depth of Red Star Macalline in the market field will be expanded.

At the same time, the original intention of Red Star Macalline is to greatly reduce the company's capital expenditure in the new expansion cycle.

"Any mall has a 5-8-year incubation period. Through the mode of entrusted management, we can quickly improve the efficiency and speed of opening stores. As of March 31, 2021, we have 93 self operated shopping malls, 271 entrusted shopping malls, 12 strategic cooperation shopping malls, and 66 franchised shopping malls. At present, the proportion of self operated shopping malls is less than 20%, and the proportion will continue to decline in the future. " Zhu Jiagui said.

Reducing leverage and safety margin

The continuous optimization of asset structure is a key word that can not be ignored in the current strategies of Red Star Macalline.

"The market has always had two questions about us. One is the determination to reduce leverage. In fact, light assets itself means the determination to reduce leverage. Because there is no capital expenditure on light assets, we spend most on property and building shopping malls. Therefore, light assets show our determination to reduce leverage. Another is to reduce leverage. At present, our plan is to steadily reduce the asset liability ratio to about 50% in the next three to five years. " Red Star Macalline home group vice chairman and Secretary Guo binghe pointed out.

Since the launch of the strategy of "light assets, heavy operation and reducing leverage" in 2020, red star Macalline has orderly controlled the scale of interest bearing liabilities. By the end of 2020, the interest bearing liabilities of Red Star Macalline decreased by nearly 2.5 billion yuan compared with that at the end of June 2020, and the interest bearing debt ratio dropped to 34.86%.

Dai Qin, deputy general manager of the securities affairs management center of Red Star Macalline home furnishing group, said that in the first quarter of this year, the expense rate of Red Star Macalline decreased by 5.20 percentage points to 39.91% year-on-year.

Among them, thanks to the improvement of management efficiency, the management expense rate of Red Star Macalline decreased by 1.05 percentage points to 11.57%.

In May this year, red star Macalline's fixed increase of 3.7 billion yuan has been approved and approved by the CSRC. According to the previous announcement of Red Star Macalline, it is planned to raise no more than 3.7 billion yuan, which will be used for tmall's "home decoration station in the same city", 3D design cloud platform construction, new generation home decoration platform system construction, home shopping mall construction project and repayment of the company's interest bearing debt.

At the same time, in June 2021, red star Macalline also announced that it would transfer all equity and all loan creditor's rights of seven logistics subsidiaries to Tianjin Yuanchuan investment, an affiliated company of COSCO capital, at a consideration of 2.3 billion yuan.

This asset includes 11 logistics real estate projects with a total construction area of about 850000 square meters.

According to the 21st Century Capital Research Institute, the capital recovered by Macalline will be used to supplement working capital, daily operation management and loan repayment.

It is worth noting that some of the successful PE Investment Equity in the early years of Red Star Macalline has entered the harvest period, or will exchange cash inflow for the company.

A typical example is Ding Dong, which was listed in the US stock market on June 29, and red star Macalline participated in its round a financing as early as 2018.

In addition, there are also red star Macalline behind Aopu home furnishing, Yitian shares and 800 million time and space enterprises.

From 2018 to 2020, red star Macalline received a dividend of 33.38 million yuan from opal home and 9.9 million yuan from top home.

According to the Research Report of Tianfeng retail, the current value of Red Star Macalline's investment in upstream brand equity has exceeded 6 billion.

"Whether it is light assets or reducing leverage, we will focus on operations to enhance the return on shareholders of the main business." Guo binghe said.

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