Brief comment on performance
1H2018, the company realized revenue / return net profit of 248 million yuan / 30 million yuan respectively, an increase of 19.21% and 50.36% respectively over the same period last year, and fully diluted EPS0.12 yuan. The revenue was in line with expectations, and the net profit was higher than expected.
Business analysis
Brand marketing promotes the income of the main piano business. In the first half of the year, the company maintained brand marketing efforts, with sales expenses of 17.0095 million yuan, an increase of 29.63% over the same period last year. The company sold 17665 pianos, an increase of 14% over the same period last year. Among them, upright piano earned 194 million yuan, up 20.48% over the same period last year; grand piano earned 26 million yuan, up 27.71% over the same period last year. Regionally, the company goes deep into second-and third-tier cities for brand promotion, together with itinerant concerts, piano competitions and other activities to ensure a steady increase in piano sales. In terms of channels, on the one hand, the company held a recommendation meeting for piano dealers offline, on the other hand, it simultaneously expanded its sales channels online, and achieved 792 piano sales through online flagship stores such as Tmall and JD.com, an increase of 65% over the same period last year.
Price increase + high-end products push up gross margin. Due to the increase in operating costs, the company's overall product prices increased by about 4% in the first half of the year. On the other hand, the company's product sales structure has also been continuously optimized, and the sales of high-end products with high gross margins have increased significantly. For example, the company Walt Disney Company piano and Helen Vienna series sold 675 units in the first half of the year, an increase of 176.64% over the same period last year. Under the superposition of these dual factors, the company achieved a gross profit margin of 29.28% in the first half of the year, an increase of 2.54pct over the same period last year.
The investment has been increased and the layout of art education has been continuously deepened. The company increased its investment in art education, increasing its shareholdings in Helen Seven Color and Helen Yuxing Management by 38.89% and 29% respectively in the first half of the year. Since 2014, the company has gradually expanded its art education and training business. Through cooperation with local education and training institutions and the acquisition of high-quality art education project resources, the company's sustainable development ability has been further enhanced. In the future, the company's main business of piano manufacturing and sales can be actively linked with the layout of art education, so as to realize the transformation and upgrading to a comprehensive cultural enterprise.
Profit forecast and investment suggestion
The company's brand marketing effectively promotes the increase in piano sales, while the development model of piano manufacturing + art education extends the company's industrial chain. We raise the company's fully diluted EPS forecast to 0.24 EPS 0.32 CAGR36.4% (3 years CAGR36.4%), corresponding to the PE is 35-27-20 times, to maintain the company's "overweight" rating.
Risk factors.
Competition in the piano industry intensifies; the promotion of art education business is not as expected; raw materials and labor costs rise.
