Key points of investment:
The company has been deeply involved in polymer composite finishing materials for 24 years, and expanded the second growth curve by acquiring fire-resistant decorative panel materials and architectural ceramics companies to lay out the pan-home furnishing industry. The company was founded in 2000 and initially produced film and artificial leather. In 2004, it laid out finishing materials for home decoration, and entered the manufacture of automotive interior finishing materials in 2010. In 2018, Tianan Integration was established to explore and expand into the field of pan-home furnishing. In 2021, it acquired “Zhejiang Ruixin”, a well-known ceramic company, and the well-known ceramic company “Yingpai Ceramics”; in 2023, it acquired Tianhui Construction Technology to enter the hospital prefabricated EPC field. The company continues to consolidate its core competitiveness in the field of finishing materials, and at the same time expand businesses such as architectural ceramics and fireproof decorative panels, to boost household transformation and renovation, and lay out a second growth curve. Revenue in 2023 was 3.142 billion yuan, up 15.7% year on year; net profit to mother was 0.121 billion yuan, turning a year-on-year loss into a profit.
The traditional automotive interior business is the cornerstone of steady growth, and the reuse of technology and manufacturing capacity is driving growth in other sectors. Automotive interior revenue in 2023 was 0.49 billion yuan, up 15.5% year on year. The company continues to expand NEV companies such as BYD and Chery, and is expected to continue to benefit from the increase in the penetration rate of domestic NEVs in the future.
The company's manufacturing and technical capabilities accumulated in the fierce competition of automotive interiors can be reused in other sectors: reuse manufacturing and supply chain management experience to improve Yingpai's production efficiency, reuse product technical capabilities to improve environmental friendliness, stability, and high efficiency of complete solutions.
Eagle is the core growth engine. After Tianan joined the market operation mechanism, it stimulated vitality and achieved countertrend growth with an asset-light model. The ceramics industry has high requirements for production-side cost control and supply chain efficiency. After Tianan New Materials acquired Yingpai, driven by the four dimensions of strategy, mechanism, management, and culture, it achieved a net profit of 0.09 billion yuan in 2023, which greatly reversed losses. At the same time, we actively explore declining market channels, empower dealers, activate Eagle's brand and product potential, and form channel-side traction. In 2023, we achieved revenue of 1.57 billion yuan, an increase of 20.8% over the previous year. Adopt outsourced OEM, central warehouse models, and large household strategies to grow against the trend and lay the foundation for medium- to long-term development. The outsourced foundry+central warehouse model has manageable asset risk, avoids insufficient utilization of production capacity, guarantees cash flow, reduces transportation, inventory and financial pressure, and is lightweight, while the central warehouse model is close to terminal outlets, responds quickly to consumer needs, helps improve the coverage capacity and speed of empty areas, and accelerates the expansion of the national market; the “ceramic+large household” differentiation strategy progresses steadily, shifting from a single tile to a “tile+rock panel+wall panel+floor” multi-category delivery, providing consumers with an environmentally friendly, prefabricated one-stop solution.
Prefabricated interior: Innovative application of automotive interior products and technology to output complete solutions. The market size of the complete assembly exceeds trillion dollars, the penetration rate of prefabricated interior decoration is increasing rapidly, and there is plenty of room for imagination. The company integrates resources from various sub-sectors around the pan-home furnishing industry chain to form differentiated competitiveness and enter the complete market. The front desk uses Yingpai Company and Tianhui Jianke's channel resources and brand capabilities for home decoration and public decoration to export tiles, door wall and floor cabinets, and polymer finishing materials. Tianhui Construction Technology has mature experience in prefabricated public installation, and can achieve rapid, safe, environmentally friendly and beautiful delivery of public space reassembly, and is expected to be replicated on a large scale in the field of stock housing renewal and old housing renovation. Zhongtai Tianan integrated output design scheme and supply chain supporting services. Backstage Tianan Polymer and Zhejiang Ruixin mainly produce decorative materials, including home decoration finishing materials and building fireproof veneer materials. They innovatively apply environmentally friendly automotive interior products and dry construction technology to finishing, creating competitive advantages over traditional decoration in terms of environmental protection, product quality, and delivery efficiency.
Profit forecast and valuation: The company's net profit for 2024-2026 is expected to be 0.152/0.213/0.285 billion yuan, respectively, +25.8%/+39.9%/+33.7% year-on-year, respectively. Considering the company's high growth, the PEG method was used for valuation, and the company was given 0.6 times PEG for 2024-2026, covering for the first time, and giving it a “buy” rating.
The catalyst for stock price performance: the increase in Eagle's profit margin, the smooth development of the prefabricated interior business, and the development of new customers in the automotive interior business.
Core hypothetical risks: weak demand in the home furnishing market, risk of business collaboration.