Suning Tesco (002024): Carrefour’s integration effect is remarkable and performance continues to improve
Key points of investment: Carrefour China’s performance continues to improve with the combination of boxing.After Carrefour China took over in Suning, the performance continued to improve. In 2019Q4, it turned into a profit and achieved 7 consecutive quarterly profits for the first time. It is expected that the net profit in the first quarter of this year will also maintain a better momentum.Suning mainly integrated Carrefour from the following aspects. First, the integration of culture and team, and then foreign executives didn’t understand the Chinese local market enough, which led to insufficient integration with local teams. The current operating team has achieved full localization.It can more quickly adapt to changes in the market; secondly, Carrefour has strengthened the assessment and incentive system and set up a variety of assessment mechanisms to fully mobilize the enthusiasm of grass-roots employees. Human efficiency has increased by more than 10% before and after the delivery. Finally, Carrefour strengthened its operations and upgraded newThe stores and the retrofitting of old stores are being promoted simultaneously, and the focus is on single product management. The gross profit margin of 2019Q4 has increased. By strengthening the cost control, the 2019Q4 expense ratio has been better controlled.  Promote integration with the Group’s business from two dimensions, supply chain and flow.In terms of the supply chain, Carrefour ‘s resources in the international supply chain are shared. There are more than 6,000 global Carrefour brands and more than 60,000 SKUs. This strengthens the supply chain output to the Suning store and helps the store’s order satisfaction rate.Significantly increase, reduce the out-of-stock rate, increase the gross profit margin, and increase the daily sales of small stores by 30%.In terms of traffic, Carrefour has about 40 million registered members, which will greatly enrich Suning ‘s traffic structure. At the same time, Suning Tesco will introduce more traffic to Carrefour ‘s home business. It is expected that the home business in March will cover more than 200 stores in 51 cities., All Suning Tesco online supermarket traffic is all introduced to the Carrefour Home Channel to improve user experience and achieve true online and offline omnichannel development.  In addition to the continuous upgrade and iteration of stores, the future development of Carrefour’s supply chain and integration with Suning’s format are key development directions.  Speed up store upgrades: In 2020, a small number of stores with high rents and low-efficiency stores will be rented out and re-leased. At the same time, the traditional store image will be changed to increase the catering industry. Carrefour stores will be upgraded to a community living center model.Species boutique gourmet supermarket 3,000 square meters, compact supermarket 5,000 square meters, hypermarket 8000 square meters), regional development focus is mainly on Jiangsu, Zhejiang, the Pearl River Delta, Sichuan and Chongqing.Strengthen supply chain construction: Focus on breakthroughs in catering and fresh produce, control product quality, promote matching of purchasing plans and user 佛山桑拿网 needs, and achieve self-operated online celebrities.Accelerate format integration: Carrefour’s home business is fully coupled with the Suning Group’s various formats to enrich the life scene circle.  Maintain profit forecast and maintain “Buy” rating: Carrefour China’s merger with Suning will improve Suning ‘s layout in the fast-moving field, and Carrefour ‘s supply chain and Suning ‘s online traffic will form a good complementarity.It is estimated that the company’s revenue for 2019-2021 will be 2922/3531/4328 trillion and the net profit attributable to the parent will be 109.4/18.6/33.80,000 yuan, the corresponding EPS is 1.18/0.20/0.36 yuan, corresponding to the current expected PE is 8/48/26 times, maintain “Buy” rating.  Risk reminder: The epidemic affects consumer demand, rapid growth in online growth, and increased pressure on offline physical stores.