Summary of the report:
The proposed acquisition of Zhuhai duty-free cut into the duty-free track. The company announced that it intends to issue shares to Zhuhai State-owned assets Supervision and Administration Commission and Urban Construction Group and pay cash to buy 100% equity of Zhufang. at the same time, it will introduce general investment and raise no more than 800 million yuan.
With the policy to guide the return of consumption, the tax-free industry has great potential. In 2019, global duty-free sales reached US $81.8 billion. Chinese consumers bought about 180 billion duty-free goods overseas and 80 billion in South Korea, while the domestic duty-free market accounted for only 53.8 billion / 8.7% of the global market. In recent years, the state has issued a series of policies to guide the return of consumption and the internal circulation of the economy. The tax-free policies on outlying islands and in the city are gradually liberalized, and the domestic tax-free industry has a bright future.
The market share of Zhufen is second only to Zhongjie, and it is the leader in profitability industry. Zhufang has the largest land port Gongbei port duty-free shop, Hong Kong-Zhuhai-Macao Bridge duty-free shop and other port duty-free shops, and through the Tianjin airport for national layout. Beads are mainly high-margin tobacco and alcohol products, and the rents of border port stores are lower and some stores are self-owned properties, so the profitability is better. Growth space short-term expansion area (Gongbei store expansion of 2200 square meters), expansion stores (Hong Kong-Zhuhai-Macao Bridge entry store has been completed, with an overall operating area of about 6000 square meters, the first phase will open 550square meters), bidding (a new batch of entry and exit duty-free shops, Zhu Min can participate in bidding), enrich categories and increase the proportion of direct procurement in the medium term (to promote the increase of gross profit margin) Long-term consumption return and location advantages (Gongbei Port has reached 145 million passengers, far exceeding the total passenger flow of the top ten domestic airports in the same period).
Investment suggestion: the company will create three major sectors, a big consumption characterized by duty-free business, a large health industry that can be developed, and a real estate industry that adheres to the fine line. Considering the bead-free merging table, it is estimated that the return net profit of the company from 2020 to 2022 is 8.5 million yuan, respectively, and the corresponding PE is 2.55 billion yuan, respectively, which is times that of 64-26-21. According to the segment valuation method, it is estimated that the target market value of the reorganized company is 63.3 billion yuan, and the target price is 16.02 yuan considering the fixed increase of equity. Cover for the first time, giving a "buy" rating.
Risk hints: M & A restructuring risk, market competition risk, acquisition integration risk.