Yuyuan Garden (600655): Jewelry stores are expanding rapidly and real estate contributes an important increase

Yuyuan Garden (600655): Jewelry stores are expanding rapidly and real estate contributes an important increase
Investment highlights The high growth results from the injection of real estate business and the good performance of the main business.2019Q1 company net profit +141.67%, the growth rate of performance significantly exceeds the growth rate of gross profit margin.Q1 gross profit margin increased substantially 2.63pp to 18.06%, the proportion of high-margin real estate business increased significantly, although Q1 real estate gross margin has decreased.77pp but still 22.99%, significantly higher than 6.69% (previously decreased by 0.36pp).In addition, resorts and catering gross margins increased by 1.79pp, 2.06pp to 86.37%, 67.13% are all businesses with higher gross margins.In addition, the company’s expense ratio increased by 1 during the first quarter.32pp to 12.61%, mainly for management, and the financial rate increased by 1.04pp, up 0.75pp. Jewellery stores expanded rapidly, and land revenue contributed an important increase.2019Q1 company revenue +39.22%, a significant improvement over the fourth quarter of last year (Q4 2018 revenue decreased by 8.5%).In terms of categories, 1) the company’s traditional main business jewelry fashion income +8.85%, accounting for 65 of the company’s first quarter revenue.9%.In the first quarter, there were 183 net openings, of which 4,179 were directly operated stores and franchised stores, and a total of 2,273 stores at the end of the period.Since 2019, the company’s jewelry business has accelerated significantly. Regardless of the rebranding of Yayi Jewellery, the substantial changes in franchisee policies have shown the changes in the mechanism brought about by the new introduction of injection and the improvement of operating efficiency.It has exceeded the average value of last year (the number of jewellery stores of the company increased by 137 in 2018). The new franchise policy has been continuously rolled out, and the expansion of franchise stores has maintained a high speed.2) Real estate business income + 821.01%, revenue increase accounted for more than 70% of the first quarter revenue increase, is the first quarter of high revenue growth.3) Resorts (proportion 4).6%) and catering business (accounting for 2.4%) revenue increased by 19.38%, 38.57%, of which the high growth rate of the catering business is mainly due to the growth brought about by the acquisition of Songhelou in August 18th. Implement the idea of “endogenous growth, extension, and integrated development”, continue to be happy, and fashion industry.1) Jewellery business brand upgrade, 北京夜网 dual brands covering all cities.The company’s jewelry business is driven by two-wheel drive of Lao Temple Gold and Yayi Jewellery, both of which are undergoing brand upgrades, remodeling, and differentiated coverage in first-, second-, and third- and fourth-tier cities.2) Outward mergers and acquisitions center around the company’s main business and arrange upstream and downstream to increase the customer base and product coverage.3) Timely launch of budget stock incentive plan and budget plan to fully bind employees’ interests.4) High index ratio and self-owned properties highlight value advantages.The company expects dividends for every 10 shares in 20182.7 yuan, ranking high in the industry.The company pre-excluded the MSCI index in 2018, approximately 3% dividend yield, and its own properties exceeding 160,000 square meters in Shanghai, Japan and other places, which is extremely attractive for overseas investors who correct stable shareholder returns and high-quality assets.Look at the previous upward space. Profit forecast: It is estimated that the operating income for 2019-2021 will be 409.93\431.48\447.8.8 billion, the net profit attributable to mothers will be 36 in the next three years.09\38.83\41.02 ppm, EPS is 0.93\1.00\1.06 yuan expected.The closing prices on April 29, 2019 corresponded to PE of 9, respectively.7 \9.0\8.5 times lower than the industry average, maintaining the level of “prudent increase in holdings”. Risk Warning: The store is less than expected, the real estate business is less than expected, and the outbound M & A is less than expected