Suning Tesco (002024): Carrefour China Completes Acquisition, Opens All Categories, Multiple Scenarios, and Smart Retailing
Company status: The company announced that on September 26, cash payment and equity settlement procedures for the acquisition of 80% equity in Carrefour China have been completed.We believe that the completion of this transaction has further enriched the company’s smart retail scene and quickly reinforced the infrastructure and core capabilities of the FMCG category.  Comment 1. The acquisition of 80% equity in Carrefour China was completed as scheduled.This acquisition of Carrefour China’s 80% equity, corresponding to a transaction price of 480,000 yuan, corresponding to zero.2xP / S, the consideration is reasonable; reached, the agreement stipulates that the transferor can sell all Carrefour China shares it holds to Suning at 9 o’clock two days after the date of delivery, at the total value of the delivery date (6 billion yuan)Multiplied by the shareholding ratio; within three years from the three years after the delivery date, all the Carrefour China shares it holds can be sold to Suning at a fair market price. Suning provided 1.2 billion yuan to the subsidiary Suning International for the remaining equity acquisition.Performance guarantee.  2. The overall scene and all categories are further improved.The final settlement is completed. Carrefour China has 210 hypermarkets, 24 convenience stores and 6 storage and distribution centers in China. The total number of members is 30 million, and the revenue in 2018 is about 30 billion yuan.The significance of this acquisition to Suning lies in: 1) The core competence of the FMCG category is rapidly improved, and the scale effect is exerted: then the integration and advancement of each other in the supply chain, logistics and warehousing, membership data, and store operations are expected to be strengthened rapidly.Suning’s fast-moving consumer goods business capabilities; how to achieve that, and Carrefour China and online Suning supermarkets and offline Suning stores in an all-round way, we expect the scale effect to play a role in promoting cost reduction and efficiency, and improve overall operating efficiency; 2)Further improve the layout of smart retail scenes 杭州夜网论坛 and leverage synergies: This acquisition completes the company ‘s offline scenes of the company ‘s “two big, two small, multi-specialists” and plays a synergistic role with existing businesses. More than 200 Suning Tesco Carrefour electrical stores will be openedIt officially opened on September 28 in the country to strengthen and further consolidate and increase the home appliance retail market share.  3. Enter a new stage of omnichannel smart retail development.This acquisition of Carrefour China is another important layout of Suning’s offline scene after the acquisition of Wanda Department Store. We believe that it shows the strategy and determination of Suning’s entire category and smart scene layout.We re-optimistic about the company’s core competitive advantages in omni-channel scenarios, supply chain, warehousing and logistics, as well as the development prospects 上海夜网论坛 of transforming omni-channel smart retail service providers, and re-perform the industry rating.  Estimates suggest maintaining earnings forecasts, currently expected to correspond to 38 times P / E and 0 in 2020.2x P / S, maintain outperform industry rating and target price of RMB 15.6 yuan, corresponding to 58 times P / E and 0 in 2020.3 times P / S, with 52% growth space.  Competition in the risk industry continued to intensify; mergers and acquisitions integration fell short of expectations.