Tianhong Co., Ltd. currently operates a total of 92 department stores/mall stores, and 11 new stores have been added this year, reaching the peak level in the past 10 years.
The company's revenue scale maintains a similar growth trend as the number of stores. Although the current industry is under pressure, Tianhong has always been in the leading position in the department store industry.
Retail Capital Theory (public ID: letmeask) analysts learned through the Qichacha APP that Tianhong Co., Ltd. was established on May 2, 1984, and the financing history shows that the amount of financing and the investor on June 1, 2010 are unknown.
Tianhong's future store expansion is mainly shopping centers, with sufficient store reserve projects and financial support, and is expected to achieve accelerated expansion;
At the same time, it insists on deepening its base in Shenzhen (Guangdong, South China) area, while consolidating its dominant position, continuously developing and experimenting new business formats, and taking into account the selection of areas across the country that enjoys the improvement of consumption capacity and the continuous release of demographic dividends, carry out encrypted penetration, and promote channel sinking.
accelerates national store exhibition and regional penetration to hedge against the weak same-store growth caused by the downward economic consumption cycle
1. The store reserve projects and financial support are sufficient, and the new additions are expected to achieve accelerated expansion in the future.
. The company's signed projects from 2018 to 2019Q3 can be found that the company has newly signed 27 department stores and shopping center projects, including 7 projects in Ningxiang, Changsha (February 2018), Jiujiang, Jiangxi (June 2018), Ganzhou Dingnan (November 2018), Shenzhen Songrui (July 2019), Shenzhen Fucheng (November 2019), Taizhou, Jiangsu (December 2019) and Shenzhen Fuyong (December 2019), all have been opened, of which 3 projects have signed a contract time less than one month from the actual opening time.
In the future, the company will continue to open stores with a strong foundation and sufficient reserves. From the perspective of regional distribution, the current department stores and shopping center projects that have not been opened are mainly concentrated in South China and Central China ; from the perspective of business format distribution, the company's future store opening is mainly shopping centers, including 17 shopping centers and 3 department stores.
company mainly accelerates the pace of store expansion through direct sales (the main business model of stores that have not opened contracts is direct sales), and at the same time explores business methods such as franchise, management output, and light asset models that cooperate with developers.
South China District contracted project Putian Hancheng will adopt the franchise model to cooperate with China Merchants Real Estate in Foshan . The two parties cooperate with Foshan IPARK project in the "lease + management output" model.
In addition, in terms of the required channel stores, there were 26 independent supermarket projects announced by the company from 2018 to 2019Q3, 8 of which have been opened, with a total of 18 project reserves, of which 16 are located in the South China region (Shenzhen, Huizhou , Dongguan , Foshan and other places).
sufficient financial support is the guarantee for future store expansion. From the perspective of capital, the company's net operating cash flow level is relatively consistent with the trend of changes in total revenue level. It has shown an upward trend in recent years, reaching 2.195 billion yuan at the end of 2018;
Although the book value of cash and equivalents has slightly declined (mainly due to the increase in the scale of net investment cash outflow), the average level since its listing reached 4.287 billion yuan, and it was 3.529 billion yuan in Q3 2019, with relatively rich capital reserves.
start in 2016, the company's cash meeting investment ratio reached more than 1, and exceeded 3 in 2018, indicating that the company's operating activities can fully meet capital expenditures, inventory increase, cash dividend expenditure and other expenses, and the net amount obtained from operating activities can support the company's reasonable expansion.
2. Deeply cultivate the advantageous areas, and take into account the continuous penetration of
As of the end of 2019, the company has entered 26 cities in 8 provinces, including Guangdong, Jiangxi, Hunan, Fujian, Jiangsu, Zhejiang, Beijing and Sichuan. It can be mainly divided into six regions: South China, Central China District, East China District, , Southeast China District, Chengdu and Beijing.
From the distribution of department stores and shopping center stores, the largest share in South China (Guangdong Province) has always been the company's core advantage area, but its share is showing a downward trend, corresponding to the increase in the proportion of central China (Jiangxi Province, Hunan Province), becoming a speeding up store exhibition area;
East China (Jiangsu Province, Zhejiang Province) and Southeast District (Fujian Province) have remained relatively stable, and the number of stores in Beijing and Chengdu has not changed since 2015.
with Shenzhen as the center, South China District contributes more than 60% of the company's revenue and gross profit. At the same time, the store in the region has higher square footage efficiency in department stores, supermarkets, and convenience store formats than other regions. This area has the characteristics of relatively complete outlets and higher operating efficiency, but the space for further penetration is small.
channel sinking speed up. From the perspective of urban classification, when Tianhong Company went public in 2010, all business stores (excluding convenience stores) were concentrated in first-, second- and third-tier cities, with the store area accounting for 50.79%. In 2018, this proportion dropped to 27.65%.
Company accelerated its pace of opening stores in low-tier cities. In 2018, the operating area of third-tier cities accounted for 6.60%, and the operating area of fourth-tier and below cities accounted for 23.86%.
According to McKinsey's forecast, the proportion of middle-class in my country is expected to reach 81% in 2022, becoming the main force in China's consumption upgrading. Among them, the middle-class in the third-tier 7 and fourth-tier cities of will become the fastest growing group in the future, and is expected to account for 40% in 2022.
company is positioned to serve the life of middle-class families. With the saturated business districts in first- and second-tier cities and fierce competition in retail markets, the consumer markets in third- and fourth-tier cities have a large room for development.
From the perspective of the company's store area distribution, South China currently includes Shenzhen, Dongguan, Foshan, Huizhou, Zhuhai and other places. Stores are distributed in all levels of cities, but because stores are mainly concentrated in Shenzhen, the proportion of first-level cities is high;
Central China District currently refers to Hunan and Jiangxi provinces. It is the area where the company's third- and fourth-tier and below stores are concentrated, mainly covering Changsha (second-tier cities) and lower-tier cities such as Jiujiang , Shangrao, and Ganzhou;
East China District includes second- and third-tier cities such as Hangzhou, Suzhou , and Jiaxing ; the southeast area includes second-tier cities such as Xiamen and Fuzhou.
1) South China District: Shenzhen contributes its main revenue as the leading advantageous area and focuses on developing and testing new business formats. Among the top ten stores in the company's current operating income, eight are located in Guangdong Province, and seven are located in Shenzhen. Changxing Tianhong, Gongming Tianhong, Bao'an Central District Shopping Center, Shajing Tianhong and other stores are firmly on the list, proving that the layout of the core stores matches the advantageous areas of the company's development.
0 Shenzhen residents’ per capita GDP and per capita disposable income are relatively high, and the corresponding consumption capacity is relatively high.
As of 2018, Shenzhen's per capita GDP reached 189,600 yuan, and Guangdong's per capita GDP was 86,400 yuan. The two are 2.93 and 1.34 times the national per capita GDP level in the same period;
From the perspective of growth rate, the five-year compound growth rate of Shenzhen's per capita GDP from 2013 to 2018 was 6.72%. Although it is slightly lower than the level of 7.99% in Guangdong Province and 8.15% in the country, its high base performance did not cause significant growth rate differences.
At the same time, in 2018, the per capita disposable income of Shenzhen reached 57,500 yuan, which was also higher than the per capita level of 44,300 yuan in Guangdong Province and 39,200 yuan in the national average; in the comparison of the five-year compound growth rate between 2013 and 2018, Shenzhen was as high as 8.88%, higher than Guangdong's 8.37% and the national level of 8.01%.
In addition, the number of permanent residents in Guangdong Province is also gradually increasing, reaching 113 million in 2018, accounting for 40 years, increasing by 2.86 percentage points from 5.27% in 1979 to 8.13% in 2018;
urban population density has also increased by more than twice from 1,402 people/square kilometer at the beginning of this century to 3,469 people/square kilometer in 2018.
From this point of view, the per capita GDP level in Guangdong Province and Shenzhen is expected to continue to rise in the future, and the per capita disposable income can still maintain a high growth rate, and the development of optional types of consumption in the region can be guaranteed at the economic level; at the same time, the population dividend in the region continues to be released, and the consumption base continues to grow.
The increase in per capita level and the increase in population will simultaneously catalyze the further upgrading of local optional consumption, which may be beneficial to the company's development in department stores and shopping center stores in Guangdong Province and Shenzhen.
2) Central Hua District: base camp focuses on development, further enhancing the layout of Jiangxi and Hunan provinces. Currently, all stores in Central Hua District are concentrated in Jiangxi and Hunan provinces.
Jiangxi Province: Company began to enter the Jiangxi market in 2002 and has intensively made arrangements in the provincial capital Nanchang . Tianhong has 8 stores in Nanchang, accounting for nearly half of the existing stores in Jiangxi;
and the company entered the local old-fashioned Qingshan Lake business district and Bayi business district earlier, and has gradually made arrangements in emerging business districts in recent years.
Nanchang Zhongshan store is located in the most traditional Bayi business district of Nanchang . It has been open for more than twelve years and still contributes high revenue and ranks among the top ten in the company's revenue scale.
compared with the chain department store BBK, the company was the first to enter the Jiangxi market, and its layout in Nanchang, which has the highest consumption level, has a floor efficiency far higher than BBK.
BBKG has no Nanchang stores. In 2018, Bubugao subsidiary Jiangxi Bubugao Commercial Chain Co., Ltd. achieved operating income of 972 million yuan, including the company's revenue in all businesses of local department stores, shopping centers, supermarkets, and home appliances. The operating area of the department store is about 197,000 square meters. If the area of supermarkets and home appliances is not considered, the average square footage of the Bubugao store is similar. It is 4934.01 yuan/m2;
During the same period, Tianhong's comparable same-store square efficiency in Huazhong District Department Store in 2018 was 5769.48 yuan/m2, which performed better than Bubugao (currently, the company has 7 stores in Central China for less than 2 years, accounting for 41%, which has an impact on the square efficiency. According to the total department stores, Tianhong's square efficiency is about 4084.04 yuan/m2).
However, Nanchang's commercial sector has risen strongly in recent years, with the increase in new entrants, and large shopping centers are the main ones.
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21 projects opened in Jiangxi Province in 2018, 4 of which were located in Nanchang, accounting for 19% of the number of projects opened in the province. The number of department stores and shopping centers in Nanchang increased to 59.
At the same time, the company began to accelerate the sinking of channels in Jiangxi Province, grabbing the shopping mall market in third- and fourth-tier cities and below.
In third- and fourth-tier cities, businesses are underdeveloped and rents are low. Choosing large shopping malls can attract consumers in a more comprehensive shopping format.
The company's shopping center stores in Jiangxi Province are mainly distributed in Ji'an and Taihe County (fourth-tier cities, 3), Shangrao City Yugan County (county-level cities), Yichun (third-tier cities) and Jiujiang (third-tier cities)
in Jiangxi Province, forming regional scale advantages;
in Shangrao, 2
in Shangrao, Ganzhou, Jiujiang and other places.
Hunan Province: company has 8 stores in Hunan Province, 7 of which are department stores, and 1 Liuyang Tianhong Shopping Center was newly opened in September 2018.
Since the regional leader You'a and Bubugao stores are mainly located in Changsha, the provincial capital, only two department stores in Tianhong are located, and the remaining 5 are distributed in counties and cities around Changsha and southern Hunan.
Hunan Province has a certain room for growth compared to the same-store square footage. The comparative store efficiency of You'a Department Store in 2018 was 18,300 yuan/m2, and the comparative store efficiency of BBK in Hunan Province reached 11,600 yuan/m2 in 2018. The comparative store efficiency of Tianhong's department store in central Huazhong District was 52.99 million yuan/m2. Since the company's layout in the city-level is relatively low, the efficiency level is lower than that of the regional leaders. However, with the gradual improvement of consumption capacity in low-tier cities, there is still room for improvement in local store performance.
From the perspective of per capita consumption capacity in central China, the per capita GDP levels in Hunan and Jiangxi Province in 2018 were 52,900 yuan/47,400 yuan, respectively, lower than the national level of 64,600 yuan. At the same time, the growth rate of the two is not better than the national per capita GDP growth;
In the same year, the per capita disposable income of the two places was 36,700 yuan/33,800 yuan, respectively, which was around 3,000-5,000 yuan from the national level of 39,200 yuan. The gap in disposable income is not obvious. In the past five years (2013-2018), the compound growth rate of per capita disposable income was 8.55% and 8.86%, respectively, which was better than the national level of 8.01%.
Overall, Hunan and Jiangxi provinces in central China have been affected by factors of relatively weak economic development in history. The per capita GDP level is relatively low, but the gap between per capita disposable income and the national level is not as big as the difference between per capita GDP, and the growth rate of per capita disposable income is relatively good, and it is expected to continue to improve in the future;
The number of permanent population in the two provinces has steadily increased, and with the increase in urbanization rate, the urban population density has doubled.
Therefore, the local consumption capacity needs an optional consumption scenario that matches it, that is, a sufficient number of urban commercial bodies appear to meet the growing and improved residents' needs. Tianhong's advance layout in the two provinces is in line with this development trend.
3. Southeast District: The benchmark city Xiamen strengthens the scale effect, and combines the expansion of third-tier cities in sinking and third-tier cities
Tianhong Southeast District's existing stores are distributed in the three cities of Fuzhou, Xiamen and Putian. With Xiamen as the center, Tianhong has 5 department stores/shopping center stores (accounting for half of the southeastern region) and 1 independent supermarket;
In addition, the company has two department store/shopping center stores in Fuzhou, namely an old store (opened at the end of 2006) and a new store (opened at the end of 2014);
At the same time, the company uses the brand recognition established in the benchmark city of Xiamen to enter the third-tier city Putian in 2019, opening the first Tianhong Shopping Center in the region.
Fujian Province's new large-scale commercial projects in recent years are mainly concentrated in Fuzhou, Xiamen and Quanzhou , and the number of stores can exceed 80%;
Fuzhou area has a slowing trend, and new stores have gradually turned to Xiamen and Fuzhou, as well as third- and fourth-tier cities such as Putian, Zhangzhou , Sanming, and Nanping .
It can be seen that on the one hand, Tianhong is focusing on the store construction in Xiamen and Fuzhou, and at the same time, it begins to layout Putian and Zhangzhou in advance, which is in line with the current trend of the development of department store/shopping center industry in Fujian Province.
From the perspective of incremental projects, the company's future development in the southeast area will still be centered on Xiamen, actively promoting the opening of new stores, and matching new and old stores. At the same time, developing new business formats such as independent supermarkets and convenience stores, improving the business format matching in Xiamen, and radiating to the southern Fujian economic circle with the help of Xiamen's economic advantage.
Based on the economic development level and population base of Fujian Province, coastal cities represented by Xiamen drive Fujian Province to outperform the overall per capita GDP of the country. In 2018, Xiamen's per capita GDP reached 118,000 yuan, and the provincial level of Fujian Province was 91,200 yuan, which was 1.83 times and 1.41 times the national per capita GDP in the same period; the five-year compound growth rate of
(2013-2018) was 7.67% and 9.42% respectively, which is similar to the national growth rate of 8.15%.
The urban population density in Fujian Province also increased significantly compared with the beginning of this century (5.83 times), reaching 3238 people per square kilometer in 2018;
Unlike the inland provinces in central China, the number of permanent population and the proportion of the total population in Fujian Province have steadily increased, reaching 39.41 million in 2018, accounting for 2.82% of the total population of the country (an increase by 0.63 percentage points in the past 70 years).
4. East China District: The year-on-year store profit growth rate is in the leading position, deepening the promotion of shopping center
Tianhong stores in East China are distributed in Jiangsu and Zhejiang provinces. Jiangsu Province mainly operates four stores; stores in Zhejiang Province are scattered in second- and third-tier cities such as Hangzhou, Jiaxing and Shaoxing .
store expansion in East China has slowed down in recent years, and 5 of the 7 stores are all over 5 years old.
As of Q3 2019, the company has a total of 16 shopping centers, of which 3 are distributed in East China. Compared with the proportion of department stores and shopping centers horizontally, it can be found that shopping centers in East China account for a higher proportion of large optional shopping channel stores.
Comparable store profit growth rate in East China has been better than the other three regions since 2017, and has achieved nearly double growth twice, mainly due to the improvement in operating efficiency of Hangzhou Shopping Center, which opened in June 2014.
According to the company's plan, the company will continue to vigorously promote the expansion of shopping centers in the East China region in the future. As of Q3 2019, the company's three unopened projects in the East China region were all located in Suzhou, Jiangsu, and the business formats were shopping centers.
From the perspective of per capita consumption capacity in East China, the per capita GDP levels of Jiangsu and Zhejiang provinces in 2018 were 115,100 yuan and 98,600 yuan respectively, exceeding 1.5 times the overall national level during the same period, and the five-year compound growth rate from 2013 to 2018 was 8.85% and 7.47%. Jiangsu still outperformed the national level on the basis of a high base, and Zhejiang did not lag significantly.
Jiangsu and Zhejiang provinces in 2018 were 47,200 yuan and 55,600 yuan respectively, with a compound growth rate of up to 8.37% and 8.43% for the five-year period. The total volume and growth rate were better than the national level at the same stage.
At the same time, the two provinces in East China, like the central China district selected by the company, enjoy the dividends of increasing urban population density and permanent population, and the increase in the base of consumer groups brought about by the continuous growth of urban population density and permanent population.
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