The current situation of the company
According to the General Administration of Customs, the export value of home appliances in November was + 62% compared with the same period last year, and the growth rate was further higher than that in October.
Comment
High growth in overseas sales. 1) Yizi overseas market demand-driven, company revenue improved quarter by quarter, 1020/2020/3Q20, company revenue year-on-year-26%, 14%, 20%, of which overseas revenue is-3%, 27%, 60%, as of 3Q20, overseas revenue accounted for 43.7%, higher than 1H20) overseas revenue growth is mainly due to the substantial increase in color TV sales boosted by demand. The overseas color TV shipments of 2Q20/3Q20 are + 19% and 99% respectively compared with the same period last year. 3) in Asia (except China), the American market is growing faster, accounting for 61.1% of revenue in 1m 3020, 7.4% in revenue, and + 8.8ppt/+1.7ppt in the same period last year.
Panel prices continue to rise: 1) since the second half of 2020, panel prices have continued to rise month-on-month. In November, 32-inch panel prices rose 79% compared with June. 55-inch panel prices rose 56% compared with June, and the pressure on the production cost side of the enterprise is obvious. 2) the competition in China's color TV market is fierce. Due to cost promotion, both the online and offline retail markets have entered a price increase cycle since July. In 3Q20/ October, the online retail price of the color TV industry was + 5.8% less than the same period last year, and the offline retail price was 10.1% compared with the same period last year. Skyworth's retail average price improvement level is basically in line with that of the industry, but overall, the profitability of the Chinese market is under pressure.
Intelligent TV platform business: 1) with the continuous accumulation of users, the revenue scale of Kukai can not be ignored. As of 3020, the total amount of intelligent terminals started by Kukai system in the Chinese market has reached 52.11 million, the monthly active volume is 31.27 million, and the average daily active volume is 17.52 million. 2) in 2019, Kukai has an income of 948 million yuan and a net profit of 148 million yuan. 1~3Q20, the Internet value-added service revenue of Kukai system is 763 million yuan, + 28% compared with the same period last year, accounting for 5% of multimedia business revenue. 3) the company currently has a total market capitalization of only HK $5.8 billion, but holds a 56.79% stake in Kukai. The company's market capitalization is undervalued according to Kokai's primary market valuation.
Valuation proposal
We keep our 2020Universe profit forecast unchanged for 2021. The current share price maintains a neutral rating corresponding to the price-to-earnings ratio of 6.0 times 2020 / 2021 and maintains a neutral rating. Taking into account the widespread concern that rising raw material costs will put pressure on the company's performance, we cut our target price by 16% to HK $2.59. Corresponding to 7.2 times / 7.1 times 2020 p / e, there is 20% upside compared to the current share price.
Risk.
The risk of market competition; the risk of global easy friction.