The company is mainly engaged in public dress business, the management style returns to be sound, the financial report quality is improved. Horizontally, the performance growth rate and debt ratio control are better than those of their peers in recent years, while the gross profit margin control and cash recovery have been improved vertically. In the future, as the company gradually returns to the main business of public clothes, the expense rate has room for further decline, and the profit promotion is more flexible.

Support the main points of rating

The company's convertible bond-to-stock price is expected to be revised down: because the stock price has been lower than the convertible stock price for a long time, the company's convertible bonds are facing resale pressure in the near future, the company issued an announcement to revise the stock price at one time, and the investment value of the company's convertible bonds is highlighted again.

The company's public dress is mainly, less affected by the real estate cycle, and the financial performance is more robust: the company's public dress business accounts for more than 70%, the home decoration business accounts for less, and is less affected by the real estate cycle. In recent years, the company has raised the requirements for customer qualification, and its business style has become more robust. Horizontally, the company's annual report in 2019 and quarterly report in 2020 have performed better than their peers. It is mainly manifested in that the growth rate of performance is better than that of peers, and the speed of debt ratio increase has been controlled.

The company's impairment risk is fully cleared, the operation is on the right track, and the financial situation is improved: the company has fully impaired the target of mergers and acquisitions in the education industry in 2018, and will further integrate the education business in the future. Vertically, since 2019, the company has improved the overall gross profit margin control and cash recovery of the project.

There is much room for decline in expense rate and great flexibility in profit improvement: the low asset turnover rate of the company due to the heavy asset attribute of the education industry and the high expense rate of the company are the two key reasons that restrict the company's profitability. In the future, as the company gradually returns to the main business of public clothes and focuses on the marketing of Huawei, the company's expense rate is expected to continue to decline, and the profit margin will be more flexible.

Valuation

The company's impairment risk is released, and the future performance will pick up somewhat. It is estimated that from 2020 to 2022, the company's revenue will be 43.04,46.05 and 4.938 billion yuan, the return net profit will be 1.55,1.91 and 235 million yuan, and the EPS will be 0.12,0.15,0.19. Maintain the company's overweight rating.

Main risks faced by rating

The decline of official business orders, the decline of educational profitability, and the financial pressure caused by the redemption of convertible bonds