<Meeting takeaways> GOME’s (493 HK) investor call on operating performance for May 2022, online growth in-line with expectations
- Online channel maintained high growth during Labor Holiday in May 2022. The conversion rate of online video guides has reached 40%.
- In 1Q22, GP margin for the group reached 17.5%, up about 7.5 ppts y-o-y.
- GOME has entered around 200 lower-tier areas and aims to enter 500 lower-tier cities by the end of 2022. Maintain HOLD with TP unchanged at HK$0.55
Please refer below for a summary of key highlights of its investors’ call:
- 440mn online visits in 2021, up by 196% y-o-y. The online channel maintained high growth during Labor Holiday in May 2022, especially for home appliance and life-service products, which grew by 247% and 229% m-o-m respectively. GOME targets to maintain this momentum and reach around 60mn monthly active users (MAU) by 2022.
- The conversion rate of online video guides has reached 40%.
- In 1Q22, GP margin for the group reached 17.5%, up about 7.5 ppts y-o-y.
- GOME’s more than 4,000 stores have covered more than 500 cities and 1,100 counties and towns. GOME has entered around 200 more lower-tier areas, and aims to enter another 500 lower-tier cities by the end of 2022. Overall revenue from the lower-tier markets represents 17-18% of total revenue and is expected to see ample room to expand further.
- The cooperation with Tencent and Huawei will provide support on traffic; coupled with precise and effective marketing, progress on repurchase rate and digital transformation will be enhanced
- GOME is actively pursuing its home-oriented service business. GOME is currently serving 50mn families, and they aim to serve around 100mn by the end of 2022. According to their calculations and measurement, the market for family-oriented retail service business can reach RMB30 trillion, and they target to achieve around 3-5% of this market in 3 years.
- The company plans for stock repurchases in the near future, which could indicate its strong confidence in current strategy implementation.
Our View
- We maintain prudent attitudes given the uncertainties of COVID-19 and the weaker macroeconomic environment. Maintain HOLD with TP unchanged at HK$0.55