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Zhou Dasheng (002867) 2019 Interim Report Comment: Rising Gold Price Drives Prime Business’s Surpassed Expected Gross Profit

Zhou Dasheng (002867) 2019 Interim Report Comment: Rising Gold Price Drives Prime Business’s Surpassed Expected Gross Profit

Zhou Dasheng (002867) 2019 Interim Report Comment: Rising Gold Price Drives Prime Business’s Surpassed Expected Gross Profit

The report reads that the company achieved revenue 23 in the first half of 2019.

900 million (+12.

51%), achieving net profit attributable to mothers4.

7.5 billion (+34.

63%), net of non-attributed net profit 44.

2.6 billion (+32.

13%).

The main points of investment are established, and franchise is still the main source of income. The rapid growth of the prime business driven by the price of gold is slightly slower than expected: by channel: franchise is still the main source of revenue.Business (e-commerce) growth accelerated.

In the first half of the year, the company’s offline self-operated / online self-operated (e-commerce) / franchise revenue ratios were 27.

67% / 9.

30% / 57.

94%.

1) Offline self-employment: income 6.

6.1 billion (+10.

9%), slightly lower than predicted.

From a quantitative perspective, the number of self-operated stores decreased by 7 in the first half of the year, and the number at the end of the period was 295, which was slightly lower than expected (the model expected a net increase of 15).

From a single store perspective, single store revenue is 222.

580,000 yuan (+0.

15%), in line with expectations, single store gross profit of 70.

260,000 yuan (+7.

7%).

From the perspective of category, self-employment 深圳桑拿网 is still dominated by prime gold, and single-store revenue replaces income 52.

The proportion of 7 trillion is less than 30%, which decreases by 20 every year.

41%.

2) Online self-employment (e-commerce): Revenue 2.

2.2 billion (+34.

71%), which was slightly higher than expected, mainly due to the higher-than-expected sales volume of Sujin, which gradually increased sales by 30.

860,000 pieces.

From the perspective of category, e-commerce is dominated by plain gold, and the sales revenue of plain gold jewelry1.

9 billion (86%), with sales of 25.

430,000 pieces (+31.

91%), the average unit price is 762.

35 yuan.

Published category income was 2,845.

RMB 870,000 (12%), sales volume is 2.

520,000 pieces (+62.

52%), the average price per unit is 1129.

31 yuan. 3) Offline joining: Revenue 13.

北京夜生活网8.4 billion (+8.

72%), slightly lower than expected.

From a quantitative perspective, there was a net increase of 231 franchised stores in the first half of the year, with a period-end volume of 3304, and the expansion rate was in line with expectations.

From a single store perspective, the single store income is 43.

100,000 yuan (-12.

13%), slightly lower than expected.

Single store gross profit 16.

07 thousand yuan (-5.

63%).

From the perspective of categories, the main types of joining are joining (-14.

35% / proportion 80.

27%).

In terms of categories: affected by the rise in the price of gold, the growth rate of mergers has fallen, and the growth of prime gold has accelerated.

In the first half of 2019, the company achieved expected jewelry revenue12.

9.6 billion (+3.

55%), income of prime gold products7.

5.0 billion (+21.

39%), the growth rate of prime gold exceeded expectations mainly due to the rise in gold prices, so consumer demand for prime gold increased more than expected.

In the first half of the year, the company’s ranking / primary gold revenue ratio was 54.

23% / 29.

5%.

The profit side exceeded expectations: The gross profit margin increased significantly, and the expense ratio decreased slightly. The company’s prime gross profit margin in the first half of 2019 was 22.

9% (+3.

8pct), the default gross margin is 27.

89% (+0.

63pct), driving the company’s comprehensive gross profit margin to increase by 3.

15pct to 37.

33%, the gross profit margin increased faster than expected, mainly due to the increase in the price of gold and the increase in the demand for prime vegetarian products, which increased the gross profit margin of 100% of the brand’s royalties and the proportion of management service fees.In increasing the gross profit margin of proprietary gold, asset impairment (changes in gold inventory prices) has decreased.

Expense rate during 1H19 was 13.

41% down 0.

47pct, mainly from the decline in sales expense ratio, of which the staff expense expenditure rate fell by 0.

27pct, advertising rates dropped by 0.

43pct, testing cost rate is 0 per year.

13pct.

Earnings forecasts and estimates We expect the company’s net profit attributable to its mothers to be 20-20% in 2019-2021.

13/12.

20/14.

740,000 yuan, an increase of 25 in ten years.

61% / 20.53% / 20.

75%, corresponding EPS is 1.

39/1.

67/2.

02 yuan, PE is 15 respectively.

56/12.

91/10.

69, give “overweight” rating.

Risks suggest higher operating costs and higher diamond costs