Brief comment on performance
In 2017, the company realized operating income, operating profit and net profit of 470 million yuan, 43 million yuan and 41 million yuan respectively, an increase of 20.68%, 40.42% and 23.12% respectively over the same period last year, and achieved a comprehensive dilution of EPS0.16 yuan, which is basically in line with expectations. The company also expects operating income to grow by about 22% in the first quarter of 2018, and net profit to grow by 30% and 60%.
Business analysis
Dig deep subdivision channels, strengthen brand marketing, and release the potential of domestic demand for musical instruments. The company's domestic business income was 421 million yuan, up 24% from the same period last year, while the export business income was 48 million yuan, down 4% from the same period last year. Among them, the increase in domestic income is mainly due to: 1) the strengthening of residents' cultural awareness and the upgrading of consumption have promoted the gradual release of domestic demand for musical instruments. The company sold 35117 pianos in the whole year, an increase of 4349 over the previous year. Considering the positive factors such as the guidance of national cultural industry policy, the two-child policy and the continuous evolution of consumption upgrading, there is great potential for piano domestic demand growth. 2) due to the increase in manufacturing costs, the price of the company's products has increased by about 6%, and the gross profit margin has increased by 0.21pct. 3) dig deep into subdivided sales channels, actively develop second-and third-tier markets and e-commerce platform sales, the annual revenue growth rate of e-commerce platform is 35%, and the construction of the company's sales network system is further improved. 4) the brand promotion construction is strengthened through activities such as extension IP cooperation, event holding and master tour, and the brand influence of the company is increasing.
We will strengthen the research and development and promotion of intelligent pianos, continuously deepen the layout of art education, and accelerate the transformation into integrated cultural enterprises. On the basis of stabilizing the traditional piano product system, the company increases the research and development of high-end intelligent piano, and further develops art education and training programs to accelerate the transformation to a comprehensive cultural enterprise. The company has launched smart piano I piano1. The annual sales volume of smart piano is 137units, corresponding to sales revenue of 5.4 million yuan. The unit price of smart piano products is about three times that of traditional pianos. In the field of art education, in August 2014, the company established Helen Art Education Investment subsidiary, which operates through signing cooperation agreements with local training institutions. The art education and training business not only brings investment income for the company, but also helps to promote the sales of piano products, extend the industrial chain and realize the transformation and upgrading to a comprehensive cultural enterprise.
Profit forecast and investment suggestion
There is a huge space for the development of the domestic art education market, and we are optimistic about the integrated development potential of the company's piano manufacturing + art education model and flexible private mechanism in the art education market. We predict that the fully diluted EPS of the company in 2018-2020 will be 0.20 CAGR20.3% 0.24 plus 0.28 yuan (3-year CAGR20.3%), corresponding to the PE of 42-35-29 times, maintaining the company's "overweight" rating.
Risk factors.
The impact of imported pianos; the rise in raw material prices and labor costs; and the promotion of art education is not up to expectations.