Gome Retail has been losing money for 3 years.
On April 20, Gome Retail (00493.HK) opened slightly higher in early trading at 0.97 Hong Kong dollars, up 32.88%. As of midday closing, Gome Retail closed at 0.83 Hong Kong dollars, up 13.69% from the previous trading day’s closing price, and the growth rate dropped by about 19 percentage points.
Picture source: Oriental Wealth
On the news, yesterday evening Pinduoduo announced its subscription to Gome Retail ’s $ 200 million 3-year convertible bonds . The two parties will reach strategic cooperation in supply chain, logistics, consumer subsidies, customer service after-sales, big data, platform traffic, etc.
Gome Retail, which is known for its offline business, has been seeking to expand its online business. The cooperation between Gome Retail and Pinduoduo started in 2018, and its CFO Fang Wei said in a conference call on April 20 that Gome hopes to perfect the online and offline retail format through strategic cooperation with Pinduoduo.
The same domestic appliance retail chain company, Gome Retail is often compared with Suning.com. However, Gome Retail’s revenue and profitability in recent years have been inferior to Suning.com. In 2019, Suning Tesco’s annual revenue reached 269.229 billion yuan, and its net profit attributable to its mother reached 9.843 billion yuan.
Gome Retail has turned from profit to loss since 2017, and has been in a state of continuous loss for the past three years, with a total loss of approximately 7.93 billion yuan. In 2019, Gome Retail lost nearly 50% year-on-year.
Data source: Gome Retail Financial Report Mapping:
CICC said after the release of its annual report that although Gome Retail ’s net loss in 2017 has narrowed year-on-year, it is still lower than expected. To. At this stage, the company is in the period of strategic transformation and adjustment, and the effect of subsequent transformation still needs to be observed. Maintain a neutral rating and target price of 0.68 Hong Kong dollars.
According to the “E-commerce Research Center”In the 2019 China E-Commerce Platform Consumer Rating Data Report, among 3C e-commerce, Gome Retail was included in the “Careful Order” e-commerce platform due to its feedback rate, timeliness of response, and low user satisfaction.
Both performance and word of mouth are low. To maintain high market expectations, Gome Retail needs to do more on the road to transformation.