The company's recent situation
Recently, Easyhome announced that Beijing Jinyu Group Co., Ltd. and Beijing Jinyu Group Co., Ltd. have signed a “Strategic Cooperation Agreement”. The company introduced Jinyu Group as a strategic investor, and the company's controlling shareholder actually holds 628,728,827 shares of the company (accounting for 10% of the company's total share capital) to Jinyu Group. The transfer price is 3.55 yuan/share, and the total transfer price is 2,232 billion yuan. After the transfer is completed, Jinyu Group will become Easyhome's third largest shareholder. This transfer does not involve a change in control of the company.
reviews
1. When Jinyu Group invests in shares, the two sides will promote industrial collaboration, strong alliances, and achieve a win-win situation. According to the announcement, in this strategic cooperation, the two sides will carry out in-depth cooperation in the fields of store operation, real estate development, assembly business, property management, digital transformation, and logistics delivery network construction. 1) Jinyu Group is a leading building materials manufacturing, real estate development and property investment group in China. We believe it is expected to provide strong industry help to Easyhome, introduce industrial resources, and strengthen brand strength. 2) In the future, Jinyu Group will actively promote the entry of building materials trade stores within its system into Easyhome, and will prioritize decoration materials for Easyhome tenants in real estate development. We believe this is expected to help the company strengthen its ability to acquire customers, improve store operation efficiency, and increase GMV growth. 3) Jinyu Group's commercial real estate will give priority to Easyhome and give certain rent concessions. We believe this is expected to optimize Easyhome's store layout and reduce costs. 4) Tiantan decoration in Jinyu is developing well. The two sides will promote the integrated development of the assembly business, improve the “building materials - construction - decoration - decoration” integrated industry chain at the same time, and quickly seize market share.
We believe that this cooperation may strengthen Easyhome's core competitiveness in terms of costs, customers, operations, integration, and digitalization. At the same time, Easyhome may also empower Jinyu Group and help Jinyu Group revitalize its assets and make comprehensive use of resources; a strong alliance will achieve a win-win situation and accelerate the increase in market share between the two sides.
2. Keep abreast of smart home and digital trends, and be optimistic about the company's market share to increase. In recent years, structural changes have become the main opportunity in the real estate industry chain: 1) Smart home: In 2022, China's smart home penetration rate was only 16.6% (Statista data), maintaining a rapid upward trend. The company grasped industry development opportunities. The company's first smart home experience center opened in Tongzhou, Beijing on August 26 this year, and plans to create a consumer experience integrating “people, cars, and homes”. Currently, the store has quickly become the company's leading store in terms of turnover. 2) Digitalization: The company promoted the digital transformation of new retail in 2012, strategically cooperated with Alibaba to lay out new retail formats, and the industrial service platform “Cave” developed rapidly. We believe that digitalization is expected to help improve the company's operating efficiency, strengthen B-side customer stickiness and C-side consumer perception, construct core barriers, and achieve a steady increase in market share.
Profit forecasting and valuation
The profit forecast remains unchanged. The current stock price corresponds to a price-earnings ratio of 12/11 times in 2023/2024, respectively. Maintaining an outperforming industry rating and a target price of 5.26 yuan, corresponding to a price-earnings ratio of 19/16 times in 2023/2024, respectively, there is room for growth of 50% compared to the current stock price.
risks
Market competition is intensifying, channel expansion risks, new business development falls short of expectations, and real estate industry chain risks.