1. Wanshengtang: deep ploughing brand building and channel operation, deep profitability event: in December 2017, Great Lake issued the "Plan for Great Lake shares to issue shares and pay cash to purchase assets and raise supporting funds and related transactions". Later, a revised draft of the plan was issued in May 2018, which proposed to buy 51% of Tibet's Shenwantou shares at a transaction price of 1.04 billion yuan. Tibet's main asset is Wanshengtang, which is the chief distributor of Okamoto in the Chinese mainland region of Japan. Revenue from January to September in 2015, 2016 and 2017 was 439 million yuan, 617 million yuan and 567 million yuan respectively. Okamoto's condom sales business income exceeded 90% of the company's total business income, and the sales gross profit margin was about 60%.
Wanshengtang Okamoto condom management model is unique, product power and brand power to build two major barriers
Upstream: starting from the product. Made in Japan to create "product power", manual testing to protect the quality of Okamoto condoms. The supplier keeps the price low all the year round, which lays the foundation for Wanshengtang to get high gross profit.
Mid-stream: focus on brand building. The main brand building strategy adopted by Wanshengtang is to coexist peacefully with competitive products and implant the brand into the hearts of consumers.
Downstream: firmly grasp the channel operation. Assist channel merchants to land Okamoto sales strategy to ensure that products gain competitive advantage at the sales terminal.
two。 The upgrading of consumption lays a good foundation for the growth of Okamoto's condom performance according to Nielsen's 2017 interpretation of China's Consumer goods Market, due to the upgrading of consumption, expensive goods show a growing market share, which means that the market share of cheap goods has been squeezed. As a valuable item in condoms, we think Okamoto also shows the overall trend of FMCG.
3. Great Lake shares multi-dimensional benefit Wanshengtang capacity, or can open all-round performance new growth Great Lake shares and Wanshengtang will cooperate in the two major directions of "brand building and channel operation". We speculate that: 1) Wanshengtang can help the Great Lake to build its brand; 2) Wanshengtang can learn from the operation and management of Wanshengtang; 3) the superimposed use of their respective channels to expand market coverage; 4) Wanshengtang can make use of the power of Great Lake shares in the capital market to further expand brand influence and financing capacity.
If the acquisition of Tibet Deep Wantou is successfully completed, according to the performance commitment of the underlying company, we estimate that the profit forecast of Dahu shares for 18-20 years is: net profit 110 million / 130 million / 160 million; corresponding EPS is 0.18max 0.21max 0.26RMB. We are optimistic about the profit growth brought about by the combination of Great Lake's own business and the underlying company's sales channels and brand-building capabilities.
Note: if the acquisition fails, according to the test preparation results of Dahu shares, it is predicted that the safety margin that the company can provide is 9.12 million / 12.55 million / 15.57 million, corresponding to an EPS of 0.02, 0.03, 0.03. The data on the first and last pages of this paper are based on the forecast of the company's performance on the premise that this acquisition does not meet expectations.
Risk hint: the acquisition progress is not as expected, the audit does not pass the risk, and the similar product replacement risk