The current situation of the company
AVC retail market monitoring.
Comment
The average retail price in the color TV market continues to decline: 1) according to AVC statistics, the market demand for color TV sets in 2018 is poor, and the market retail sales are-8.6% year on year. Among them, 4Q18 was originally the peak season of the industry, but retail demand deteriorated. Online / offline retail sales in the color TV market were-11% and 22% respectively compared with the same period last year, while online / offline ASP were-13% and 6% respectively compared with the same period last year. 2) in January 2019, due to the time difference of the Spring Festival, the retail sales of color TVs picked up somewhat, and the online / offline retail sales were + 15% and 1% respectively compared with the same period last year. However, the decline in industry average prices brought about by the reduction in panel prices continues, with ASP on / off color lines respectively-15% and 12% compared with the same period last year.
The company's market share is stable: 1) the online / offline market share of Changhong color TV in 2018 is + 0.4ppt/+0.1ppt to 6.6% and 10.6% respectively compared with the same period last year. Over the same period, the company's average retail price fell by-4.6% to 2405 yuan / 3579 yuan, which is expected to reduce the company's 4Q18 profitability. 2) in January 2019, the growth rate of online / offline retail sales of the company was higher than that of the steel industry, with a year-on-year growth rate of + 20% and 5% respectively, but ASP was-4% and 15% respectively.
XIAOMI has a great impact on the color TV industry: 1) XIAOMI quickly gained market share through online channels in 2018, and the proportion of retail sales increased to 17% from 9% in 2017, ranking first. 2) the penetration rate of online channels in the color TV industry reached 47%. The impact of XIAOMI had a negative impact on the whole industry, resulting in the reduction of costs (panel prices) in 2018 could not be converted into corporate profits, and the profit space of the industry was squeezed.
Look forward to the color TV subsidy policy: 1) in history, the home appliance subsidy policy benefits the color TV market and has a positive effect on the color TV market and the performance of the leading color TV companies. 2) recently, the government has repeatedly stressed the need for home appliance stimulus policies in various localities. At present, the Beijing area has launched home appliance stimulus policies.
Valuation proposal
Due to the obvious decline in the average price of 4Q18 color TV industry, the 2018 EPS forecast for 19 years has been reduced by 10% to 0.09 EPS 0.10 yuan, and the 2020 EPS forecast of 0.12 yuan has been introduced. Maintain the neutral rating and downgrade the target price by 10% to 2.81 yuan, corresponding to 30x/28x 2018 ticker 19e Pmax E.
The current share price corresponds to 28x/27x 2018 Universe 19e Ppace E, and the target price is 6 per cent higher than the current share price.
Risk
Competition risk in color TV market.