Loss in 4Q13 is much worse than expected
While sales grew by 4.8% to RMB30.4bn, net profit significantly dropped by 84.4% to RMB53m. The bottom line is 70.4%/74.3% below DBe and the market forecast, mainly attributed to weaker sales (1% below expectation), less associate income, and higher ETR. The company made a loss of RMB138m in 2H13 (a loss of RMB6m in 3Q13 and RMB132m in 4Q13). No final dividend was declared, which means the full year payout was nil. Net cash declined to RMB10.8bn vs. RMB11bn in 2012.
Key highlights of the results
SSSG was 2.13%, with 1.22% for hypermarket, 2.61% for supermarket and 11.13% for CVS.
GPM improved by 0.8ppt to 14.4% but consolidated GPM declined by 0.5ppt to 22.5%. A better merchandise margin was offset by a decline in supplier income (down 17%).
Opex rose by 5.9%, of which staff costs were up by 8%, D&A expense down 4%, rental cost up 3%. Accordingly, staff cost ratio increased by 0.3ppt to 9.6%. D&A expense and rental cost ratio was down 0.1ppt to 1.8% and 5.5% respectively.
The company made an operating loss of RMB202m in 2013. The op. loss in 2H13 was RMB286m, doubling the op loss amount in 2H12. Hypermarket OPM was down by 0.9ppt to 0.5%, supermarket OPM maintained at 2.9% and loss at CVS expanded to RMB86m vs RMB24m in 2012.
It net closed 1 hypermarket, 694 supermarkets and 126 CVS to a total of 4530 outlets as of end 2012. During the period, it opened 312 new stores, including 3 hypermarkets, 153 supermarkets and 156 CVS.
The company will have analyst conf call at 9:30am on 28 Mar.