Cross-border Link (002640) Annual Report 2018 and 2019 First Quarterly Report Review: Inventory Impairment Slows Performance and Business Enters Adjustment Period

Cross-border Link (002640) Annual Report 2018 and 2019 First Quarterly Report Review: Inventory Impairment Slows Performance and Business Enters Adjustment Period
The 2018A / 2019Q1 company achieved an increase in operating income of +53.6% / + 2.2%, attributable net profit for ten years -17.1% 重庆耍耍网 /-15.3%, lower than market expectations.Inventory risk arises from the combined effect of own business model and external influences, May 2018.The 400 million inventory depreciation reserve accrued a drag on performance. 2019Q1 is still in the adjustment period, and business improvement is yet to be tracked. 2018A / 2019Q1 achieved operating income of 215.300 million / 47.2 trillion, +53 a year.6% / + 2.2%, attributable net profit 6.200 million / 2.2 ‰, at least -17.1% /-15.3%, lower than market expectations.Operating revenue in Q1 2018 increased by +74% / + 80% / + 87% / + 9% year-on-year; operating revenue in Q1 2019 increased by +2.2%. 2018A / 2019Q1 deducted non-attributable net profit 5.700 million / 2.1 ‰, at least -22.3% /-16.8%.Provision for asset impairment in 20185.9 million US dollars severely dragged down performance, of which bad debt provision / inventory depreciation provision / goodwill impairment provision were 0.4.4 billion / 5.4.3 billion / 0.04 billion. The main self-operated model of private channels, OEM private brands account for a high proportion, and category characteristics are the root cause of the company’s inventory risk.The company’s sales model is self-employed, with its own channels as the mainstay, and third-party channels supplemented by direct sales of goods to domestic and foreign consumers. In 2018, the company’s cross-border export self-operated website realized operating revenue of 8.1 billion yuan, accounting for the company’s cross-border export revenue./ Total operating income is 52% / 38%.In terms of the commodity supply chain, in 2018, there were nearly 120 private brands under the OEM model, with revenue accounting for 39%; third-party supplier brands are mainly buyouts.In terms of category structure, the proportion of clothing and apparel / electronic products / maternal and infant supplies in 2018 accounted for 15%.8% / 56.6% / 27.7%. Cross-border export / import income is +19% / + 41% per year, and Paterson and Youyi E-commerce have grown rapidly.In terms of cross-border e-commerce exports, it achieved operating income of 154 in 2018.9 trillion, + 19% a year, of which Global Tesco revenue is 120.7 trillion, ten years + 14%; Paterson income 34.2 ‰, + 41% a year.In terms of cross-border e-commerce imports, it achieved operating income of 59 in 2018.800 million (previously + 41%), of which Youyi E-commerce has consolidated its accounts since February 2018, reporting a potential contribution of 56.100 million, accounting for 26% of revenue. The overall gross profit margin increased, and R & D investment increased.2018A / 2019Q1 company’s comprehensive gross profit margin is 40.6% / 43.3%, ten years -9.twenty one.4 items, among which, the gross profit margin of mother and baby products / electronic products / clothing and home furnishings decreased by -5.7 pieces / -0.1 / -1.Three.The company’s sales / management / financial expense ratios were 31 in 2018.5% / 1.7% / 0.9%, six years -6.9 pieces / -0.2 pieces / -0.7 pcts; The sales / management / financial expense ratio of the company in Q1 2019 was 31.6% / 2.9% / 1.8%, twice -2.2 / + 1.3 / -0.6.In 2018, the company completed the gradual architecture upgrade of its self-operated website and the optimization of its e-commerce system, and its overall R & D investment1.200 million a year + 53%.In summary, 2018A / 2019Q1 company period expenses 34.3% / 37.0%, one year -7.9 / -0.9. Risk factors: inventory management risk, foreign trade policy risk. Investment advice: The company’s own channels are mainly self-operated, with a high proportion of its own brands. The business model based on clothing / electronics brings pressure on inventory management. In 2018, the company’s rapid expansion was affected by capital pressures.Mention 5.After 9 million assets were depreciated, they were ready for battle.In 2019Q1, the company is still in the period of operation adjustment, and its performance improvement remains to be seen.Revise down 2019 operating income forecast to 239.0 million yuan (Original: 374.2ppm), plus revenue forecast for 2020-21 of 264.100 million / 291.300 million; lowered EPS forecast for 2019 to 0.66 yuan (Original: 1.15 yuan), plus the EPS forecast for 2020-21 is 0.73/0.80 yuan, think the company’s business is still in the adjustment, given a target price of 13 yuan, downgraded to “overweight” level.