Baby Rabbit: the leader in the wood-based panel industry, the dividend value is highlighted

Bunny was founded in 1992 and launched in 2005. It specializes in two major businesses: decorative materials and custom home furnishings. It is one of the leading enterprises in the domestic wood-based panel industry. In 2023, revenue was 9.063 billion yuan, YOY +1.63%; net profit to mother was 0.689 billion yuan, YOY+54.66, of which the decoration materials business achieved revenue of 6.856 billion yuan in 2023, accounting for 75.65%; the custom home furnishing business achieved revenue of 2.117 billion yuan, accounting for 23.36%. The company is one of the varieties with high dividends in the real estate chain. With the exception of dynamically adjusting cash dividends in 2020 due to factors such as the acquisition of Yufeng Hantang, the company has been rewarding shareholders and investors with higher dividends since 2017. The estimated dividend payment rate for 2023 is approximately 66.10%, and the dividend rate is approximately 6.06% (based on the closing price of July 30, 2024).

Wood-based panels+custom homes, stock decoration market expansion

Companies in the wood-based panel market have cleared, and average production capacity has increased: The main products of wood-based panels include plywood, fiberboard, chipboard, etc., which can be used in furniture manufacturing, building decoration and flooring industries. Since 2020, the wood-based panel industry has shown a trend where the number of enterprises has been drastically reduced, and the average production capacity of enterprises or production lines continues to grow.

Customized homes are upgraded from single products to whole-house customization: Custom homes have advantages such as high design and flexible customization. They can respond to different needs in a timely manner, attract and enhance customer stickiness, and the market size is growing rapidly. In 23 years, the penetration rate of custom homes reached more than 50%, and the high growth stage gradually came to an end. The new cycle will further test the brand power, channel power, and design productivity of enterprises.

The outlook for the home building materials market is improving: urbanization deepens and demand for improved consumption increases. Shell Research conservatively estimates that the size of China's furniture market will be around 3.9 trillion yuan in 2024. With the advent of the real estate stock era, the national demand for second-hand housing decoration has increased, and the share of the existing housing decoration market will reach 60% in 2024.

Multi-channel layout, supply chain collaboration

Whole house customization+easy installation, perfect supply chain, high-end brand image, providing one-stop in-depth service: the company has high-quality core materials+integrated production and delivery capabilities for all categories to create a strong whole house custom brand in East China.

By 2023, the company had 350 integrated home furnishing stores (including 257 whole-house customization), 203 whole-house customization stores, and 909 easy-to-install stores in the packaging business.

Sinking+online, C+small B multi-channel: The company mainly focuses on dealer channels. On the basis of implementing a branch operation model, the company has set up multiple professional channel operation centers and operating companies. By 2023, it has opened more than 4,000 specialty stores for various product systems to achieve vertical segmentation management in various fields in the subregion. Develop small B customers such as home improvement companies and furniture factories. By the end of 2023, the dealer system cooperated with more than 16,000 furniture factory customers. Expand the online market, and by the end of 2023, nearly 400 specialty stores will achieve high-quality new retail operations.

The OEM model reflects the level of quality control management: integrating supply chain advantages and using OEM to break through traditional operating transportation radius, order area, and production capacity restrictions. The products sold by the company are mainly OEM, accounting for about 90%.

Investment suggestions: We are optimistic about the company ① to develop township+online+furniture factories to develop channel layout; ② board+whole house customization to actively expand the industrial chain; ③ cost reduction and efficiency, high-quality development under capital management; ④ increase the dividend ratio. The company's net profit for 2024-2026 is estimated to be 726, 8.74, and 1.01 billion yuan, respectively. The current price corresponds to PE 10, 9, and 8 times, respectively, to maintain the “recommended” rating.

Risk warning: risk of increased market competition; risk of falling short of expectations in accounts receivable; risk of falling short of expectations in implementing real estate policies.