The market led the way in 2018, with an increase of about 20%:
We are the first team to launch MingDiao shares in the market in 2018, and it has increased by about 20% in the 30 trading days since the recommendation. In 2017, the company achieved revenue of 744 million yuan, an increase of 7.72% over the same period last year, and a net profit of 52 million yuan, an increase of 1.98% over the same period last year. The net profit of returning home in the first half of 2018 is expected to be 9.6809 million yuan to 12.9078 million yuan, a year-on-year change of-10% to 20%. As the leader of luxury housing decoration in South China, the company is making steady progress and striving for governance.
The luxury housing market in Shenzhen is steadily rising, providing a guarantee for performance growth:
In 2017, under the circumstances of strict regulation and control of the property market and flagging transactions, the luxury property market in Shenzhen rose against the trend. The average price of luxury houses continued to rise to 995 million yuan per square meter, up 12% from the previous month. More than 30 million luxury homes sold 431 units. The luxury housing market is expected to remain steady in 2018, but the growth rate is likely to slow from last year. As a leading integrated home service provider in the industry, the company's main business includes original residential design and engineering construction, customization of wooden products and supporting services for main materials and soft equipment. Its main customers are large and medium-sized residential customers, especially in Shenzhen, accounting for 56.13%. In addition to the above-mentioned luxury housing stock market, the incremental market is also considerable. The stable demand of Shenzhen luxury housing decoration market will provide support for the steady growth of the company's future performance.
The upgrading of consumption has brought about industry expansion, and regional leaders have a bright future:
In recent years, with the improvement of residents' income level, consumers' demand for residential decoration is no longer limited to meet the most basic residential attributes, its decoration style and quality represent the taste and social status of consumers. According to the company's 2017 annual report, revenue from residential decoration design and construction reached 511 million yuan, accounting for 68.65 percent, while revenue from building materials and wood products sales reached 198 million yuan, accounting for 26.55 percent.
Under the industry trend of consumption upgrading, the company not only meets consumers' high requirements for quality with strict production standards, at the same time, four sub-brands are developed according to the different needs of different consumer groups: "famous carving design", "famous carving Dandi", "famous carving school" and "famous carving Shengbang". They focus on the decoration design and construction of large and medium-sized apartments, luxury villas, complete mansions and high-end public clothes. To provide customers with a full range of quality services.
Under deleveraging, cash flow is king:
Thanks to the increase in decoration contracts and commodity sales brought about by the development of integrated business and the increase in decoration business, the company's net cash flow of operating activities reached 181 million yuan in 2017, an increase of 85.72% over the same period last year, the highest since listing. The company's annual asset-liability ratio in 2017 was only 44.55%, far below the industry's median level, and the current ratio reached 1.79. In the context of the overall deleveraging of the industry, the company has a sound cash flow and a low level of debt. We believe that such home decoration enterprises with good cash flow will continue to be favored by the market in the future.
Financial forecast and valuation: from 2018 to 2020, the company is expected to achieve a return net profit of 0.59, 0.69, 0.81 million yuan, an increase of 15.2%, 16.0, 17.3%, corresponding to an EPS of 0.45, 0.52 and 0.61 yuan. The current share price corresponds to the 2018-2020 PE of 58Universe 50Unix, maintaining the "recommended" rating.
Risk tips: the prosperity of the real estate industry is declining, labor costs are rising and so on.
