The champion in the field of brand hotel decoration, with steady growth:
Yatai International is one of the leading companies in China's high-end public building decoration industry, and it is also a leading brand in the field of high-end star hotels, especially international brand hotels. The company makes great efforts to develop the design and engineering business, actively expand high-quality customers, and undertake an increase in orders, bringing steady growth in revenue and net profit. In the first three quarters of 2018, revenue reached 1.563 billion yuan, an increase of 17.86 percent over the same period last year, and net profit reached 79 million yuan, an increase of 30.33 percent over the same period last year. As of the second quarter of 2018, the company has signed unfinished orders of 4.021 billion yuan, sufficient orders on hand to provide a strong guarantee for future performance growth.
The design strength of the high-end hotel is world-class, and the brand advantage is outstanding:
The company's design business is mainly original design, and its design level has been recognized by international hotel management groups and international counterparts. Its international design brand-Cheng Chung Design (CCD), ranks third in the world in the 2013 Global Hotel Design Top 100 ranking by Interior Design, an authoritative professional interior design magazine in the United States. Since its establishment, the company has put original design at the top of the company's development strategy, and its revenue share of its design business has risen from 15% in 2016 to 18% in mid-2018, ranking first in the industry. The gross profit margin of the design business reached 39.19% in the first half of 2018, leading other comparable listed companies in the same industry in China, and has an absolute competitive advantage.
Focus on EPC model development strategy to increase market share:
The company has a wealth of successful experience in high-end star hotel architectural decoration design, decoration engineering construction and decoration supporting services, on which we can open up the service process and form a unique EPC service model. The company's design brand CCD and engineering brand ATG realize the perfect connection between design and construction to ensure the successful promotion and application of EPC model. In 2017, the operating income of the EPC project was 879 million yuan, accounting for 48.16% of the company's total operating income. The company has positioned EPC model as the main mode for future business, and has completed a number of high-end star hotel projects through EPC model, which have been successfully delivered to owners and wine management companies, such as Shenzhen Zhongzhou Marriott Hotel, Continental Hotel, No. 1 Sanlitun, Beijing, Hangzhou Pan Hai MGM Diaoyutai Hotel, etc.
For the first time, it covers giving a "recommended" rating:
From 2018 to 2020, we estimate that the company will achieve an operating income of 2.180 million yuan, an increase of 19.4%, 14.2%, and 1.72 million yuan, respectively, a year-on-year increase of 27.5%, 24.8%, 22.5%, and a corresponding EPS of 0.76, 0.95, 0.95, 1.17 yuan. The current stock price corresponds to 13.0 times of PE from 2018 to 2020. Considering the company's leading design strength, outstanding brand advantages, the smooth development of the superimposed EPC model, covering for the first time, it is given a "recommended" rating.
Risk tips: real estate cyclical fluctuations, payback risk.