Investment logic
Custom home new members: the company's main custom wardrobe and supporting furniture, boutique hardware and ecological door three major product systems, with dealers as the main sales channel.
The three major product systems are all located in the fast-growing track: 1) customized wardrobes and supporting furniture: at present, the domestic custom home market is about 270 billion yuan, the average growth rate of the industry is about 30%, and the market competition is becoming increasingly fierce. Among them, the size of the custom wardrobe market exceeds 80 billion yuan, but the market penetration is low and only 30%, and the growth rate of the industry can still be maintained at a high level. 2) Fine hardware: in terms of smart locks, domestic sales of smart locks are expected to exceed 32 million sets by 2020, with CAGR reaching 74%. As for the intelligent clothes rack, the current market size of the clothes rack is about 13 billion yuan, and the electric clothes rack market accounts for about 23% of it. The intelligent clothes rack, as a collection of excellent electric clothes racks, will have the opportunity to replace more traditional clothes hangers in the future to expand market share.
3) wooden doors: at present, the domestic wooden door market is nearly 150 billion yuan, but most of the markets are small and medium-sized enterprises, and the concentration needs to be improved. At the same time, driven by customized household enterprises, customized wooden doors have gradually become an important category, in which the ecological door series is also gradually active in the market.
The production and sales have improved, and the performance in the next three years has been sound: 1) the steady development of distribution channels: in 2017, dealers contributed 91.36% of the company's income, including 1085 dealers and 1316 stores. As the company's main products, custom wardrobe and matching furniture, the average sales of dealers in 2017 reached 952800 yuan, an increase of 12.80% over the same period last year, and the turnover of a single store reached 809000 yuan, an increase of 14.13% over the same period last year. In addition, the company cooperates with Evergrande in the form of home coupons. Evergrande channels contributed 168 million yuan in revenue to the company in 2017, accounting for 20.83%. In the future, the company's distribution channels will continue to sink to third -, fourth-and fifth-tier cities, and a broader marketing network layout is expected to lead to sustained revenue growth. 2) capacity expansion and thickening performance: the company plans to produce 300000 sets of custom furniture construction projects annually after IPO, which is expected to increase revenue by 518 million yuan, while the intelligent manufacturing production line construction project for intelligent locks and intelligent clothes drying machines is expected to increase revenue for the company by 291 million yuan.
Valuation and investment advice
The company's three major business systems are in the stage of steady growth, and IPO is expected to accelerate performance growth after it reaches production in 2021. We predict that the fully diluted EPS of the company in 2018-2020 will be 1.04 PE 1.30 PE 1.57 yuan respectively, and the corresponding target price will be 26.1 yuan in 2019, giving the company a "neutral" rating for the first time.
Risk hint
The risk of a sustained sharp decline in real estate sales, the lack of enthusiasm of dealers to open stores, the risk of channel sinking less than expected, the risk of declining profitability under the expectation of industry price war, and the risk of substantial fluctuations in raw material costs. the production capacity of the fund-raising project was released less than expected, and the operation of subsidiaries failed to improve.
