Suning Appliance: Rapid expansion of store performance in line with expectations

In the 3rd quarter of 2010, the company realized operating income of 18.247 billion yuan, an increase of 28.14%, to achieve the ownership of the listed company's shareholders net profit of 854 million yuan, an increase of 21.23%.　　In the first three quarters of the year, the total operating income of 54.302 billion yuan, an increase of 30.61%, to achieve the ownership of the listed company net profit of 2.828 billion yuan, the year-on-year increase of 43.58%, the earnings per share of 0.404 yuan. In the new shop, the third quarter of 136 new chain stores, of which conventional shops, county town stores, boutiques, respectively, 87, 46 and 3, the regular shop opening speed obviously so that the annual regular shop 200 goals are expected to exceed the realization. The first three quarters of the company opened 285 new chain stores, of which 183 of conventional shops, county town stores 95, boutique shop 7, the total number of mainland stores has reached 1206. Because the county town store's expansion is slightly slow, it is difficult to achieve 200 goals for the year, but 100 of the adjusted target can be exceeded. Overall, this year the company still maintained a rapid expansion momentum.　　On the international market, the number of new shops and closed stores in Hong Kong is so far equal, the number of stores remains 22, and the number of stores in Japan Laox is 7, which can now achieve break-even.　　Benefiting from the upturn in the economy and the stimulus of a series of related policies, coupled with a shift in the company's merchandise sales structure in recent years, the sales revenue of the previous three quarter has been higher than that of the store, and I believe we can expect to achieve a growth rate of 15% per cent a year.　　Profit quality, the first three quarter gross profit margin of 17.28%, increased by 1.1% per cent, the same period of management costs and sales cost rate fell by 0.16%, the quality of earnings remain in a stable channel of Ascension. From the quarterly bulletin, we found that the company gradually attached importance to the construction of the shop/purchase shop, the 3rd quarter in Dalian, Kunming, Xian bought 3 stores, but also since the establishment of the Weihai shop, Xuzhuang headquarters and logistics Base, increased short-term capital expenditure.　　In addition, the difference between the subscription of Laox and the settlement of cash receipts and payments led to a 129.4% per cent year-on-year decrease in the net increase in cash and equivalents in the 3 quarter, but due to abundant cash flow at the beginning of the year, the balance of cash and equivalents continued to improve over the previous period. Recent stock price callbacks are larger, and corporate valuations are still below the industry average. In view of the company's current strong expansion momentum, the market outlook is still good, maintain the company's "recommended" rating and 18.84 yuan target price.