I. Overview of events
On March 11, 2021, the company released its 2020 annual report, with revenue of 3.2 billion yuan, an increase of 0.24% over the same period last year, and a net profit of 300 million yuan, down 7% from the same period last year.
II. Analysis and judgment
Strengthen channel construction in an all-round way, revenue increased by 0.24% over the same period last year.
According to the company announcement, the company's domestic retail channel revenue is 1.6 billion, an increase of 0.27% over the same period last year, and the engineering channel revenue is 800 million, an increase of 12% over the same period last year. During the reporting period, the company comprehensively strengthened channel construction: 1) upgrade and open new stores to expand retail channels. By the end of the reporting period, the company "Huida" brand has a total of 2243 stores in China, with a total area of 427100 square meters; 2) focus on engineering, comprehensive layout of key customer strategy. The company has reached strategic cooperation with R & F Real Estate, Poly Development Holdings, Cambridge Real Estate, Aoyuan Group, Wanda Group, COSCO Holdings, Shouchuang Real Estate, China Aung Real Estate and other well-known real estate. 3) reorganize home improvement, introduce talents to create elite teams, strengthen management, make up for weaknesses, widen the channels, work the market, and make it a new profit support. Looking forward to 2021, we judge that with the relief of the epidemic and the recovery of real estate completion data, the company's channel layout is expected to fully support the rapid growth of future performance.
Policy promotion, fine decoration permeability improvement and material upgrading, integrated bathroom permeability is expected to increase rapidly compared with Huida bathroom matching traditional bathroom products (about 4200 yuan), integrated bathroom in the single suite order value (about 7000 yuan) has increased significantly; we estimate that the market space for complete bathroom in 2020 will reach 1.8 billion yuan, long-term can reach 83.3 billion yuan, the market space is vast. The penetration rate of fine decoration of real estate continues to improve, which is good for the market share of downstream leading enterprises to increase. According to Oviyun.com, the penetration rate of fine decoration in real estate has increased from 12% in 2016 to 32% in 2019, but compared with the penetration rate of more than 80% in Europe and the United States, there is still a lot of room for improvement in China. With the promotion of local policies, the penetration rate of hardcover repair rooms will continue to infiltrate and is expected to reach 80% in 2029, corresponding to 8 million hardcover houses. As housing enterprises have higher requirements for the brands, production capacity and products of downstream suppliers, with the improvement of hardcover housing penetration, downstream leading enterprises are expected to increase market share and improve the competition pattern.
Completion continues to pick up, sanitary ware and other real estate after-cycle products are expected to continue to benefit from the cumulative growth rate, the transmission time between real estate sales and housing completion is 2-3 years; as the last high year-on-year growth rate of sales area occurred in March 2016, according to the historical transmission time, the cumulative year-on-year high of completed area is expected to occur in 2020-2021. From the monthly completion data, the monthly growth rate of housing completed area has become positive in May 2020, and is expected to continue to rise.
III. Investment suggestions
It is estimated that the EPS of the company in 2021 and 2023 is 1.04,1.21,1.38 yuan respectively, and the corresponding PE is 11.9,10.3 and 9.0 times, respectively. At present, the average valuation of comparable companies in the building materials industry is 15 times, maintaining the "recommended" rating.
Fourth, risk tips:
The recovery rate of completed data slows down, the penetration rate of fine decoration slows down, and the penetration rate of complete sanitary ware slows down.