Core views:

Drawing on overseas experience, the long-term demand for decorative panels is stable, and leading companies are steady and far-reaching. Demand for wood-based panels in Europe has been stable for a long time, and demand is resilient in the downward phase of new construction. According to each company's official website and FAO, we estimate that CR3/CR5 in '21 will be 55%/72%, respectively, and the long-term operation of leading EGG will be stable; the current domestic decorative board size is about 200 billion yuan, and the total population and renewal demand guarantee a stable market. CR3/CR5 is about 13%/16% respectively in '23, and there is a lot of room for concentration increase.

Mainly decorative panels: channel transformation is further deepening, furniture factory+township channel growth is accelerating, and market share is entering a period of accelerated increase. Bunny's channel transformation over the past 20 years has had remarkable results. The new construction boom has shown strong growth resilience. Since 23, channel changes have been deepened. The growth in the next few years will focus on furniture factory channels and township channels. The furniture factory channel still has a lot of room for medium- to long-term growth, and the township channel has great short-term incremental flexibility. Under the transformation of different consumption scenarios, Bunny can have strong coping ability and comprehensive competitive advantage. What is behind it is its core competitiveness established after years of deepening channel changes. Currently, its market share is entering a period of accelerated growth.

Supplied by custom homes: the entire house customization of the headquarters gradually became large-scale and entered a period of healthy growth; Qingdao Yufeng and Hantang controlled scale, reduced risk, and sought transformation.

Asset-light operations have high ROE, incentives pay sufficient attention to sharing, and stabilize dividend repurchases. “Low profit, multiple sales, light assets, and high turnover” achieved a high ROE, averaging 25% + over the past 5 years; focusing on shareholder returns, historical dividends+repurchases totaling 3.5 billion yuan, accounting for 86% of the cumulative net profit from 05 to 23.

Profit forecasting and investment advice. We expect EPS to be 0.88 and 1.02 yuan/share respectively in 24-25, corresponding to 11.17 and 9.59 times PE according to the latest closing price. Bunny's current market share is entering a period of accelerated growth. Dividend repurchases are high and stable. It maintains the company's judgment of a reasonable PE valuation of 15x in 24 years, corresponding to the company's reasonable value of 13.18 yuan/share, maintaining a “buy” rating.

Risk warning. The effect of the channel transformation fell short of expectations, demand for real estate completion fell sharply, and Yufeng Hantang's performance dragged down beyond expectations.