On September 26, Suning.com announced that it had repurchased a total of 60.39 million shares from June 28 to September 24.

The intention is clear, to boost confidence.

In the past year and a half, Suning under Zhang Jindong has taken many actions and measures, which can be simply summarized in four words: defensive counterattack.

According to the 2024 semi-annual report of Suning.com, the company achieved operating revenue of 25.783 billion yuan in the first half of the year, a year-on-year decrease of 24.26%. Net profit attributable to shareholders was 15 million yuan, and net profit after deducting non-recurring items was -530 million yuan, a narrowing of 73.10% from the same period last year.

It is worth noting that Suning.com's net profit attributable to shareholders in the second quarter was 112 million yuan, marking the company's first quarterly profit in 12 quarters.

Revenue declined but profits grew, indicating that Zhang Jindong's cost reduction and efficiency enhancement measures are beginning to bear fruit.

The financial report shows that Suning.com's various expenses decreased across the board in the first half of this year. Sales expenses were 3.247 billion yuan, down 31.59% year-on-year; administrative expenses were 1.088 billion yuan, down 18.58% year-on-year; financial expenses were 1.571 billion yuan, down 4.5% year-on-year; and research and development expenses were 128 million yuan, a significant decrease of 45.69% year-on-year.

On the asset side, Zhang Jindong has also been continuously shrinking his front lines.

On August 27, Suning announced the sale of its logistics asset, Tiantian Express, with its subsidiary Jiangsu Suning Logistics Co., Ltd. transferring its 100% equity interest in Tiantian Express, as well as all claims held by Jiangsu Suning Logistics and the company's subsidiaries against Tiantian Express, to Zhejiang Rongyue Express for a transfer price of 10 million yuan.

According to Suning.com's estimates, these two transactions will increase net profit by approximately 555 million yuan and 425 million yuan, respectively, for a total of 980 million yuan.

From 2012 to 2018, Zhang Jindong invested a total of over 70 billion yuan in external investments, which later severely dragged down Suning's financial statements. However, with a series of closures, mergers, and asset sales, the risks on Suning.com's asset side are rapidly clearing.

In the first half of this year, Suning.com's trading financial assets and other non-current financial assets changed in value, and the provision for asset impairment losses decreased, resulting in improvements of 46.63% and 80.19%, respectively, in the company's "fair value change loss" and "asset impairment loss" accounts.

At the same time, due to increased gains from debt restructuring and long-term equity investments accounted for using the equity method, Suning.com's investment income in the first half of the year reached 5.566 billion yuan, a surge of 282.04% year-on-year. Among them, Suning's securities investment in China Unicom amounted to nearly 300 million yuan, and Jiangsu Suning Bank, in which Suning holds a 30% stake, achieved an operating profit of 4.475 billion yuan in the first half of the year, bringing substantial investment income to the company.

Whether it's cost reduction and efficiency enhancement or asset sales, the essence is defense, but for Suning at present, defense alone is clearly not enough.

In 2024, Suning.com readjusted its strategy and pace in the offline market, proposing to open large and high-quality stores.

In April, Suning.com successfully acquired an important landmark commercial complex in Beijing, the Beijing Central Television Tower Store, known as the "Asia's No. 1 Store" in the home appliance industry, striving to create Beijing's first Suning.com Max Super Experience Store exceeding 20,000 square meters. During the May Day and 618 periods, Suning.com successively opened a number of benchmark stores such as Max and Pro in core cities nationwide.

As of the first half of this year, Suning.com had 124 Max and Pro stores covering 54 cities nationwide. According to information disclosed in the financial report, an additional 97 stores are expected to be opened or renovated in the third quarter.

On one hand, it focuses on high-tier cities, and on the other hand, it targets the lower-tier markets.

This year, Suning.com continues to focus on the retail cloud network in county, town, and rural markets, but the strategy has undergone certain adjustments, shifting from focusing solely on quantity to emphasizing both quantity and quality. In the first half of the year, Suning.com Retail Cloud began implementing a large-store strategy, opening 740 new franchise stores. Retail Cloud stores have now covered tens of thousands of townships in 31 provincial administrative units nationwide, entering over 85% of China's county-level markets.

In May this year, Suning.com Retail Cloud secured a new round of strategic investment from Jiangsu Branch of CITIC Financial Asset Management Co., Ltd. for 480 million yuan. Although the amount is not significant, reopening financing channels is of great significance to Suning at present. At the Retail Cloud Partner Conference held in July, Suning.com clarified its goal of opening 30,000 stores by 2025.

In fact, the reason why Suning dares to expand aggressively offline this year is directly related to national policies.

In March this year, the State Council issued the "Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods," which clearly states the need to carry out trade-ins of automobiles and home appliances and provide subsidies to consumers for purchasing green and smart home appliances.

In July, the state issued "Several Measures to Strengthen Support for Large-scale Equipment Renewal and Trade-in of Consumer Goods," once again proposing support for the trade-in of home appliances.

On August 25, four departments including the Ministry of Commerce issued another round of new policies, with the subsidy for trading in old home appliances reaching a new high.

As a designated home appliance retail platform for government subsidies, Suning.com is at the forefront of the trade-in program. In addition to government subsidies, the company has also proactively joined forces with brand factories and banks to increase resource investment. The combined five subsidies can offer discounts of up to 40%, stirring up quite a stir in the consumer market.

According to data disclosed by Suning.com, on the first day of the launch of the subsidy program for trading in old home appliances in Chongqing on August 26, sales at Suning.com stores in Chongqing surged tenfold year-on-year.

Seeking offense while defending and leveraging national policies to aid its expansion, Suning, after much turbulence, has finally returned to the right development path.

Disclaimer

This article contains content related to listed companies and is based on the author's personal analysis and judgment based on information disclosed by the listed companies in accordance with their statutory disclosure obligations (including but not limited to interim announcements, periodic reports, and official interaction platforms). The information or opinions in this article do not constitute any investment or other business advice. Market Value Watch assumes no responsibility for any actions taken as a result of adopting this article.

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