Incidents:
The company released its 2018 annual report, achieving revenue of 1,975 million yuan and net profit of 176 million yuan. The year-on-year rate was 10.3% and 7.01% respectively, and earnings per share were 0.13 yuan. Distribution plan: A cash dividend of 0.65 yuan (tax included) will be distributed for every 10 shares, and 0 bonus shares (tax included) will not be transferred to the capital from the Provident Fund.
Commentary:
Revenue from the piano business grew steadily, and profitability declined slightly
The revenue of the piano business in 2018 was 1,901 million yuan, an increase of 10.53% over the previous year, and the total sales volume of pianos reached 156,000 units, an increase of 7.74% over the previous year; among them, sales of high-end products in Kaiserburg increased 13.27% year on year, and sales of the grand piano increased 10.3% year on year. Benefiting from the continuous optimization of the product structure, the company's piano unit price increased by 1.6 percentage points. Affected by the economy, revenue fell 6.94% in 18Q4, and consolidated gross margin fell 1.46 percentage points to 31.32% in 2018.
The music and art training business is still being incubated
The company's education and training business revenue in 2018 was 62.95 million, an increase of 33.3% over the previous year, and gross margin increased 19.27 percentage points to 19.66. The company is committed to building an art platform for famous music artists integrating instrument exhibition, art exchange, and high-end training. It has set up direct education stores in Beijing, Guangzhou, Foshan, Fuzhou, etc., and launched art education products including Pearl River Haino's Falling in Love with the Keyboard, Pearl River Piano Art Classroom (645, including 309 art class franchisees and 336 course series franchisees), Pearl River Piano Smart Piano IN series, Pearl River Piano Smart Piano IN series, Qilu Technology's GEEK smart instrument, and Magical Smart Acoustic Piano.
Maintain a “Cautious Recommendation - A” rating. Using its own brand and channel advantages, the company responded positively to the country's quality education policy, promoted the strategic layout of the new “instrument+education+service” business format, and grasped the huge market space for consumption upgrades in the field of art training. It is estimated that the company's EPS for 19-20 will be 0.14 and 0.16 yuan respectively, corresponding to PE and PB in '19, 51 and 3.3 respectively. Maintain a “Cautious Recommendation - A” rating.
Risk warning: The music arts training business fell short of expectations.
