The company introduced a strategic investor, Jinyu Group, to open a new chapter in leading home retail and maintain buying ratings
On November 17, the company announced that controlling shareholders “Easy Holdings” and co-founders Wang Linpeng and Huixinda Building Materials signed an agreement with Jinyu Group (601992 CH) to transfer 630 million tradable shares (10% of the company's total share capital) to Jinyu Group at a price of 2.23 billion yuan, a discount of 3.55 yuan/share; on the same day, a strategic cooperation agreement was signed with Jinyu Group to carry out in-depth cooperation with Jinyu Group in the fields of store operation, real estate development, integration, property management, digital transformation, and logistics delivery network construction. Jinyu Group is held by the Beijing State Assets Administration Commission. It is one of the largest building materials manufacturers in the country and a leading housing enterprise in Beijing.
This war, on the one hand, can actually promote direct collaboration with Jinyu's multiple businesses; on the other hand, it is also expected to help optimize the financial structure and enhance profitability. Referring to Wind Comparable's 17.3xPE in '23, considering that the company's business is expected to accelerate growth after state-owned investment, the company was given 19xPE in '23, with a target price of 4.94 yuan (previous value of 4.42 yuan), maintaining the buying rating.
Focusing on core businesses such as home furnishing stores, and promoting collaboration between leading businesses in multiple dimensions in the home furnishing store business, Jinyu actively promoted the entry of building materials trade stores into EasyStore, increasing the actual overall rental rate. Accordingly, it actually gave rent concessions and marketing resources to the participating stores; in terms of real estate development business, Jinyu gave priority to purchasing finishing materials from Easy Stores to promote GMV in stores; in terms of property leasing, actually, when expanding home furnishing stores, shopping centers, and warehousing and logistics business, Jinyu definitely gave priority to Jinyu's properties Rent concessions; assembly business and property management aspects In fact, Jinyu and Jinyu can promote the integration of their businesses, learn from each other's experiences, and increase the overall scale of their business. In addition to the business mentioned above, Easyhome and Jinyu Group have also signed relevant strategic cooperation in digital transformation, logistics, and testing services.
In fact, it still maintains a steady pace of digital development. Building a new ecological home furnishing retail industry with Dongwo as the core has a long chain and many participants. It actually revolves around the B-side and C-side pain points, respectively, to build a service platform for the digital home improvement industry. For the B side, the company developed its own digital home furnishing management platform to provide global solutions for home furnishing stores, dealers, and factories/brands; for the C side, the company uses Dongwo as the carrier to restructure key consumption scenarios such as online, in-store, off-store, and home-delivery. The introduction of Jinyu as a battle investment is actually expected to empower Jinyu Group in real estate, home improvement, home furnishings, retail, etc., and promote its digital transformation while increasing the revenue scale of its own service business.
The leading household retail industry is steady and far-reaching, and is expected to further enhance competitiveness. The prosperity of the home retail industry is gradually picking up, but in the short term, it is still being suppressed by factors such as real estate sales. Easyhome's introduction of state-owned investment in Beijing is expected to promote business collaboration between the two sides in various fields, while also enhancing Easyhome's long-term competitiveness. As the home retail industry survives the fittest, Easyhome's market share is expected to increase further.
Risk warning: macroeconomic recovery falls short of expectations, implementation of real estate policies falls short of expectations, and the company's digital upgrade falls short of expectations.