Main points of investment
The chain of acquisition price, enter the cross-border e-commerce industry. The company announced that it intends to buy 65% of the shares in Shenzhen price chain held by 21 shareholders, including Gan Weizao, at a transaction consideration of 1.014 billion yuan in cash. The price chain is a cross-border exporter focusing on e-commerce retail and e-commerce services, with operating income / return net profit of 457 million yuan / 54.79 million yuan in 2016. The committed net profit in 2019 is RMB250 million in 2019, and this transaction corresponds to 15.6 times of PE in 2017. This transaction brings the company cooperation in capital / marketing mode / sales channel / supply chain management, and the company is expected to further improve its performance and market capitalization by building a "zipper + cross-border e-commerce" business development model.
Price chain: excellent cross-border export integrated service e-commerce. The company adopts B2C mode and sells electronic products / household products / car peripheral products in the United States / Europe / Japan and other regions. On the channel side, when private brands are sold through third-party service platforms such as Amazon/eBay/aliexpress, the revenue share of 2017 Q1 is 92.70%, 6.72% and 0.58%, respectively; on the supply chain side, new products are purchased directly from manufacturers in small batches and multiple batches through OEM or ODM, and stock is prepared in advance according to market conditions, so as to improve inventory turnover efficiency and reduce procurement costs. In the warehousing and logistics side, the company adopts the combination of domestic and foreign warehouses, and has warehousing and logistics service agreements in the United States, Germany and Britain overseas.
B2C industry: the scale of the industry is large, and products / channels and warehousing / services are the core logic of competition. China's cross-border e-commerce business-to-consumer transactions totaled 940 billion yuan in 2016, compared with CARG39.18% in the past five years, according to the China E-Commerce Research Center. Cross-border e-commerce companies are accelerating their access to the capital market and grabbing the export share of cross-border e-commerce. Up to now, there are more than 10 B2C cross-border e-commerce enterprises that have entered the capital market, but the total market concentration is only 2.54%. The industry competition is fierce and highly dispersed. Looking to the future, the process of industry capitalization is expected to continue to accelerate, and more cross-border e-commerce companies will make use of capital market forces to achieve a new round of development and promote the gradual increase of industry concentration. To sum up, enterprises with the following characteristics are expected to win in the competition: (1) provide products with comprehensive price ratio through high-quality selection; (2) downstream channel / inventory logistics management and control capability; (3) do a good job in back-end service and marketing.
Cross-border e-commerce relies on branding and boutique strategy / logistics warehousing / marketing advantages. 1. Branding enhances added value, and boutique enhances profitability. Private brand positioning is reasonable, compared with non-self-owned brand has additional brand added value, compared with other private brand performance-to-price ratio is relatively high. On the other hand, the company adheres to the boutique strategy, selects "popular styles" and streamlines the SKU,2016 annual gross profit margin of 56%, which is at a high level in the industry. Looking forward to the future, the company hopes to further expand the product category; 2. Open up overseas warehousing and enhance consumer experience with the help of third-party platform logistics. The company's overseas warehousing and logistics bring three advantages: (1) shorten transportation time, reduce logistics costs, and improve turnover efficiency; (2) expand product categories; (3) upgrade after-sales service. 3. Continuously improve back-end marketing services to promote traffic conversion and realization.
Risk factors. 1. Risk of overseas demand fluctuations. two。 Competition exacerbates the risk. 3. The risk of integration is not as expected.
Profit forecast, valuation and investment rating. Xunxing shares as a zipper leader, through the acquisition of the value chain to form a "zipper + cross-border e-commerce" double main business pattern. It is expected that the company's zipper business will grow moderately in the future, while making use of capital market forces for cross-border e-commerce layout. (1) without considering the amalgamation table, the current stock price is 14.01 yuan per share, which corresponds to 38 times of the 2017 PE. The current stock price is increased from 2017 to 2019 EPS forecast to 0.37, 0.40 and 0.44 yuan (the original EPS forecast is 0.35, 0.39 and 0.43). (2) in the case of table consolidation (assuming consolidation in 2017), it is predicted that the company's EPS in 2018 and 2019 will be 0.68 and 0.87 yuan, respectively, and the corresponding valuation of the company in 2018 and 2019 will be 16 times of that in 2019. Maintain the "overweight" rating, with a target price of 15.95 yuan per share, corresponding to 2018 (taking into account the price chain and table) 23 times PE.