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Public company info - Lianhua Supermarket Holdings Co. Ltd. - H Shares , 00980.HK
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Lianhua Supermarket Holdings Co. Ltd. - H Shares, 00980.HK - Company Profile
Chairman Pu Shao-hua
Share Issued (share) 373,000,000
Par Currency Renminbi
Par Value 1.0
Industry Department Stores & Shopping Malls
Corporate Profile Business Summary: The principal activities of the Group are operation of chain stores including supermarkets, hypermarkets and convenience stores primarily in the eastern region of the PRC. Performance for the year: During the period under review, the Group’s revenue was approximately RMB26,331 million, representing a year-on-year increase of approximately RMB472 million, or approximately 1.8%. During the period under review, the Group’s gross profit was approximately RMB3,535 million, representing a year-on-year increase of approximately RMB16 million, or approximately 0.5%. the overall gross profit margin of the Group was approximately 13.43%, representing a decrease of approximately 0.18 percentage point as compared with the gross profit margin of approximately 13.61% in 2019. During the period under review, the Group’s loss before taxation amounted to approximately RMB15 million, representing a year-on-year decrease in losses of approximately RMB31 million, or approximately 66.4%. During the period under review, the Group’s loss attributable to shareholders of the Company amounted to approximately RMB319 million, representing a year-on-year decrease of approximately RMB59 million, or approximately 15.6% in losses. During the period under review, the net loss margin was approximately 1.21%, representing a year-on-year decrease of approximately 0.25 percentage point in losses. Based on the 1,119.6 million shares issued by the Group, the basic loss per share were approximately RMB0.29. Business Review Hypermarkets During the period under review, the Group’s hypermarket segment continued its upgrading and iteration of hypermarket 2.0 community neighbourhood centre, deepened the finalization of its 3.0PLUS model, created customer experience with diversified market and catering scenarios, accelerated the construction of digital store system, and actively enhanced its online operation capability. During the period under review, the hypermarket segment of the Group recorded a revenue of approximately RMB15,026 million, representing a year-onyear increase of approximately 0.3% and accounting for approximately 57.1% of the Group’s revenue. Same store sales had a year-on-year decrease of approximately 5.82%. During the period under review, the hypermarket segment recorded a gross profit of approximately RMB2,004 million, representing a year-on-year increase of approximately RMB16 million. Affected by the outbreak of COVID-19, revenue from suppliers decreased by RMB48 million year on year, and rental income from leasing of shop premises recorded a year-on-year decline of RMB107 million, which led to a year-on-year decline of approximately RMB251 million in the consolidated income. The aggregate of distribution and selling expenses and administrative expenses amounted to approximately RMB3,235 million, representing a year-on-year decrease of approximately RMB102 million. The finance cost dropped by RMB23 million year on year. Other expenses increased by approximately RMB126 million year on year, which was mainly due to the effect of closure plan of certain stores of the hypermarket segment. The segment operating profit amounted to approximately RMB119 million, representing a year-on-year decrease of approximately RMB254 million, and the operating profit margin declined year on year by 1.70 percentage points to approximately 0.79%. Supermarkets During the period under review, the Group’s supermarket segment focused on transformation and upgrading. It consolidated its established foundation while seeking innovation with a focus on the community fresh produce supermarkets. Through category planning and brand revamp, the Group differentiated and created the community-based fresh produce shopping experience with its own characteristics, and reconstructed the store space based on scenario and product portfolio optimisation to improve the effectiveness per square meter. During the period under review, the Group’s supermarket segment recorded a revenue of approximately RMB9,572 million, representing a year-on-year increase of approximately RMB613 million, or approximately 6.8%, and accounting for approximately 36.4% of the Group’s revenue. In particular, same store sales had a year-on-year growth of approximately 4.0%. During the period under review, the supermarket segment recorded a gross profit of approximately RMB1,310 million, and the gross profit margin rose year on year by 0.18 percentage point to approximately 13.68%. The consolidated income was approximately RMB2,080 million, representing a year-on-year increase of approximately RMB133 million, and the consolidated income margin remained unchanged at 21.73% as compared with last year. The segment operating profit amounted to approximately RMB176 million, representing a year-on-year increase of approximately RMB213 million, and the operating profit margin rose by 2.24 percentage points to approximately 1.83%. Convenience stores During the period under review, the convenience store segment focused on “streamlining structure, cutting costs and reducing loss faster”, accelerated reorganisation of store with loss in each area, downsized the work force by several measures and controlled operating costs. During the period under review, the convenience store segment recorded a revenue of approximately RMB1,577 million, representing a year-on-year decrease of approximately 13.8% and accounting for approximately 6.0% of the Group’s revenue. In particular, same store sales decreased by approximately 0.41% year on year. The convenience store segment recorded a gross profit of approximately RMB214 million, and the gross profit margin decreased by 3.12 percentage points to approximately 13.58%. Gains of RMB73 million from disposal of the land parcels at Caoyang Road was included in other income and other gains. The consolidated income was approximately RMB401 million and the consolidated income margin increased by 3.38 percentage points year on year to approximately 25.45%. The aggregate of distribution and selling expenses and administrative expenses amounted to approximately RMB403 million, representing a year-on-year decrease of approximately RMB156 million. The loss-making store reorganisation resulted in a year-on-year increase of approximately RMB73 million of other expense. During the period under review, the convenience store segment recorded an operating loss of approximately RMB210 million, representing a decrease of approximately RMB72 million in losses as compared with last year. The operating profit margin rose by 2.12 percentage points to approximately -13.31%. Prospects: The year of 2021 is a new start for the 14th Five-Year Plan and the Vision 2035 of China. Facing the complex and profound changes in the international and domestic environments, the Chinese government will take proactive measures to cope with the new environment and new challenges, and stick to the general principle of pursuing progress while ensuring stability. Based on a new development stage, it will promote new concepts and build new patterns for development, and unremittingly deepen reform, opening up and innovation. It will consolidate and expand the achievements of epidemic control and economic and social development, implement the macro-policy in a scientific and accurate manner, endeavour to maintain the economy within a reasonable range and ensure that the 14th Five-Year Plan will have a good start. In 2021, with persistent and effective epidemic control, further economic recovery and the construction of new development pattern in which domestic economic cycle plays a leading role, the Chinese government will deepen reform and innovation in the future to stimulate the endogenous dynamics of market entities, and roll out more policies to boost residents’ consumption, improve the consumption environment and develop new consumption growth engines, further building a favourable consumption environment, making greater effort to increase residents’ income and improving residents’ consumption power and willingness to spend. The Group anticipates that residents’ consumption will maintain steady growth in 2021, the consumption upgrading will have a strong momentum and stimulate industry upgrading to accelerate, and that consumption will play a greater role in driving the economic growth and become a strong engine for China to seek progress and maintain stability in 2021. In such a context, the Group will follow the vision of “basing on the Yangtze River Delta region, expanding to the whole country, integrating the supply chain effectively to offer a full range of high-quality products, and becoming an omni-channel lifestyle retailer with local spirit” in 2021, uphold the principle of “nothing but thirty, innovation & revolution”, stick to the key tasks of the year of “segment and end model and expansion, product portfolio planning and supply chain construction, private-label brand, excellent implementation and brand revamp”, and endeavour to win the three battles of “comprehensively promoting the whole-area sales”, “improving consumers’ perception of core categories and realising growth in sales of core categories”, “organisational reform, process reconstruction and digitalised operation”, with the dual drive, being “organisation and mechanism” and “digital drive”, serving as the support system. In 2021, the Group will comprehensively promote whole-area sales. It will advance the whole-area category management in an all-round manner, establish its online category and front-end warehouses, strengthen membership services and improve user experience on its own platform, and develop community group purchase and other new businesses. Leveraging the development of delivery-to-home business, the Group will build a category structure centred on “fresh produce”, capitalise on the customer flow of external platforms to build its brand influence, and take the advantage of its front-end warehouses to drive greater market penetration. It will cooperate third-party platforms to build the reputation in the e-commerce field, further develop its online category structure, and highlight the service value. The Group will comprehensively promote the category management and whole-area sales of segments, closely follow market trends to improve product categories, and extend the achievement of category solidification. On the basis of accelerated improvement of secondparty logistics efficiency, it will build the new retail logistics ecosystem. Through the new retail logistics system, it will promote the delivery-to-home and next-day delivery model, and launch intra-city retail and third-party services, which will focus on cold chain products and realise half-hour and one-hour delivery in Shanghai. The regional central warehouse will support the second distribution of hypermarkets and supermarkets, and realise nextday delivery and scheduled delivery through the trunk line logistics, which will significantly reduce the logistics and distribution fees. The Group will reshape its membership system and flow operation ecosystem, taking stores and applets as the main positions, developing more ecosystem flow entrances through we-media operation and paid marketing operation and achieving flow conversion. It will promote digital stores, build the digital store system that aims to improve online and offline consumer experience and supports micro-level business operation, and integrate online and offline data to realise whole-process visualisation and realtime accessibility to business data. In 2021, the Group will make efforts to improve consumers’ perception of core categories and realise growth in sales of core categories. It will build the supply chain model and strengthen product quality control, logistics, fresh produce promotion, store operation and training; apply smart promotion and pricing tools to develop online-offline coordinated differential promotion campaigns, focus on S-grade marketing, and launch “scenario + blockbuster” theme marketing activities to improve marketing and promotion effectiveness and benefits. With the consumerdriven model, the Group will study and satisfy what the consumers want, expedite the development of core categories, concentrate on the enhancement of dinner scenario, and comprehensively improve the whole-chain, omni-channel experience and sales presentation. It will continue to improve the visual effect of display scenario, take theme activities as the opportunity, make use of new media platforms, integrate new media resources, and launch diversified activity-based communications, thus connecting and interacting with consumers via multiple ways, building close relationship with them and better conveying the brand philosophy of “To offer better products, better experiences, and better living every day”. In 2021, the Group will further advance organisational reform, process reconstruction and digitalised operation. It will review headquarters-business division/region-store relations, initiate process reconstruction for headquarters, business divisions and stores, strengthen the operation and procurement coordination of fresh produce category, and further develop the features of each segment. The Group will establish an integrated operation standard of operation-procurement-sale-distribution to draw together and standardise the operation, enable seamless connection among departments and make the work measurable and verifiable. Basing on the SOP reconstruction, the Group will comprehensively upgrade the standardised operation, promote the technology-driven digitalised organisation operation, and build the service brand. It will consolidate and streamline the organisation structure, adjust the reporting hierarchy, form an efficient and flat organisation, and gradually unify the remuneration and benefit structure and the performance evaluation and incentive policy to form a positive and negative bi-directional incentive mechanism. The Group will employ the digitalisation-driven category and supply chain management, improve the product structure, apply smart promotion to increase the proportion of effective promotion, thereby improving the consolidated revenue. It will promote the construction of digital supply chain and integrate the logistics system to realise supply chain whole-process digitalization covering products, stocking, selling and storing, logistics and operation. In 2021, the Group will continue to promote the segment and end model and expansion. The hypermarket segment will further upgrade and iterate the hypermarket 2.0 community neighbourhood centre, building hypermarket 2.0 into community life centre & vibrant hustle and bustle for life, and continue to explore the hypermarket 3.0 market model, constructing hypermarket 3.0 into the omni-channel interactive market based on the 3-kilometer service circle of stores. The directly-operated business under the supermarket segment will expedite the expansion and transformation of community fresh produce store, with the franchise business focusing on the development of close-relationship franchising and semi closerelationship franchising models. The convenience store segment will put emphasis on store improvement and streamlining and further develop stores with profit and loss balance, to realise sustainable growth of the segment. In 2021, the Group will integrate high-quality resources effectively for the category planning and supply chain construction, build a nationwide fresh produce value chain, strengthen coordination and collaboration with suppliers across the country, initiate strategic cooperation for core categories, and develop a JBP strategic cooperation model pursuing shared future and mutual benefits through joint efforts. The Group will advance the penetration of its privatelabel brand, expand the product line of Lianhua Quality, develop the features of high quality and cost-effectiveness to build the reputation of Lianhua Quality and Lianhua Excellence series, and realise the promotion of Lianhua private-label brands across the country. In 2021, the Group will continue to promote the brand revamp, accelerate the implementation of brand system planning and build a nationwide, systematic and unified brand image.

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