Promising in SSSg terms, with long-term store expansion story; Buy    Yonghui's strong store-opening pipeline in 4Q17/2018gives us more confidencein its sales growth in 2018/2019F. SSSg is seeing sequential improvement withtraffic resuming positive growth since 3Q. We believe this is mainly helped by itscompetitive fresh food segment. We also believe its cost advantage from supplychain management will help it to achieve GPM expansion over time. We havefine-tuned our 2017/2018NP by -3%/+2% to reflect a slightly higher opex ratio in2017and an acceleration in store opening in 2018. We also roll over by one yearto 2019in our DCF model and raise our TP by 14% to RMB10.14. We maintainour Buy rating on this stock.    Yonghui reported NP up by 131% to RMB337m on sales up 20% to RMB15bn in3Q17. Sales were largely in line with DBe while NP was 6% lower than DBe. Thediscrepancy mainly stemmed from a higher-than-expected opex ratio. We expectthat SSS in 3Q was up by 1.5% vs. 0.8% in 1H17, and that Oct was even better.We expect the company to open 106/100new stores in 2017/2018(gross base)and also to open another 100Yonghui Life and 100Super Species storesby 2017/2018respectively. We believe its acceleration of store expansion andeffective organization structures (four business units and partnership model)can help the company to continuously enjoy better-than-market performanceand operating leverage. We forecast its NP for 2017/2018/2019to grow by47%/44%/29%, respectively.

声明：如本站内容不慎侵犯了您的权益，请联系邮箱：wangshiyuan@epins.cn 我们将迅速删除。