The current situation of the company

Due to the need for epidemic prevention and control, the start of work across the country has been generally postponed to February 10; recent Amoy data retail monitoring and update.

Comment

Cooking utensils are less affected by the epidemic: 1) Cooking utensils are convenient for online shopping, and we expect that cooking utensils will be relatively less affected during the offline control period. 2) the company's offline channels are mainly in shopping malls and supermarkets, and the passenger flow of the above channels will be affected in the first quarter.

The share of online retail declined: 1) according to Amoy data, retail sales at Aijida flagship stores increased by 16% in 2019 compared with the same period last year, significantly lower than the growth rate of Subor's flagship kitchen utensils store (36%), indicating that the company's share of online cooking utensils is declining. The growth rate of the company's retail sales is low, mainly due to the obvious decline in the average retail price and the decrease of the company's share in the middle and high-end market. In 2019, the average retail price of flagship stores is only 115 yuan, which is obviously widened by Subor (average price 156 yuan). 2) due to the 4Q19 Singles Day promotion, the company was ill-prepared. In November, retail sales at Estelle's flagship stores were-27% year-on-year, while Supor grew 89% over the same period last year. This has led to the poor performance of the company's 4Q19 online retail.

There are more one-time benefits from land collection and storage in 2020: according to the company announcement, the company's Wenling factory will be expropriated and reserved, with a net book value of 24 million yuan and an estimated market value of 289 million yuan. We expect to bring an after-tax profit of 220 million yuan.

Valuation proposal

We maintain the 2019 EPS forecast of RMB 0.41; taking into account the impact of epidemic prevention and control on domestic sales in 2020, reduce the 2020 income and operating net profit, but as the land acquisition and storage will bring one-time benefits in 2020, we raise the 2020 EPS forecast by 111% to 0.99 yuan; introduce the 2021 EPS forecast of 0.49 yuan. Maintain the neutral rating and maintain the target price of 9.00 yuan, corresponding to 22x/9x 2019Mather 20e Pmax E, with an increase of 15%. The current share price of the company corresponds to 19x/8x 2019 Universe 20e P Unix E.

Risk

The development of the epidemic exceeded expectations; the risk of demand decline in the domestic market.