This week, the high-profile National Congress will kick off. From the perspective of the local two conferences, "intelligent manufacturing" has become an important breakthrough in revitalizing the real economy and accelerating industrial transformation and upgrading. It has become the key word of the local two conferences, and it is speculated that it will become a hot spot in the two sessions of the country.
Minister of Industry and Information Technology Miao Wei has said many times recently that this year will be a crucial year for the full implementation of the "China Manufacturing 2025 Strategy". The Ministry of Industry and Information Technology and other departments will introduce a series of measures to promote the continued implementation of the strategy and the comprehensive transformation and upgrading of the manufacturing industry. For example, the “Made in China 2025†pilot demonstration city plans to have 20-30 cities to be selected this year.
The industry believes that with the recent publication of the "Manufacturing Talent Development Planning Guide", the "1+X" planning system in "Made in China 2025" has been released. At the same time, more than 20 provinces, autonomous regions and municipalities including Shanghai, Guangdong, Jiangsu, and Zhejiang have also issued specific local “Made in China 2025†implementation policies. “Made in China 2025†is being fully transferred to the implementation stage, and leading enterprises in related fields will usher in tremendous development opportunities.
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Superstar Technology: RMB depreciation benefits significantly
The hand tool business has significantly benefited from the depreciation of the RMB. The RMB depreciated against the US dollar in the fourth quarter of 2016, which was about 3.88%, which was the quarter with the largest depreciation in the whole year. The company's hand tools business revenue is 96% + from exports, and most of them are settled in US dollars. Benefiting from the depreciation of the Renminbi, the company's gross profit margin growth and exchange gains and losses led to the rapid growth of the company's annual performance. Looking ahead, it is expected that the gross profit margin of the company's hand tool business may reach a level of around 33%, which is expected to hit a record high.
The smart tools business has become a new growth pole. It is expected that the company's laser smart tool business in 2017 is expected to achieve a revenue of 700 million yuan, a rapid growth from around 200 million yuan in 2016. Among them, Huada Kejie's revenue is expected to reach about 300 million yuan; PT company will achieve about 300 million yuan in revenue. In addition, the company's acquisition of Micro-Nano Technology is expected to realize the combination of intelligent control chips and traditional hand tools, and promote the intelligent upgrade of traditional hand tools.
Valuation has a margin of safety. The company's current share price corresponds to 2017/18 P/E of 21x/19x. The company's historical P/E average is about 25x, and the current valuation is already in the bottom of the company's historical valuation. In addition, the company has a disposable cash of about 1.8 billion yuan and holds an equity value of about 1.2 billion yuan in the Hangcha Group. The overall valuation is more attractive.
Valuation and recommendation: Revise up the company's 2016~18 performance forecast by 9.9%/5.6%/5.4% to 650 million yuan, 772 million yuan and 847 million yuan. The target price is 20.50 yuan, corresponding to 2017P/E28x.
Risk: RMB exchange rate fluctuations, hand tool business was lower than expected, and smart manufacturing business integration was lower than expected.
Yazhen Home: European furniture leading company
European furniture leading enterprise. The company integrates product development, design, production and sales. It is mainly engaged in the production and sales of medium and high-end furniture products. The leading products are “Ya Zhenâ€, “Ya Zhen Li Livia†and “Ya Zhen Wei Georgia†brand series. European style furniture is one of the earliest professional manufacturers and sellers involved in European furniture. The company's products are positioned in the high-end and high-end, and the implementation of multi-brand strategy, so that each brand complements and promotes each other, maximizes the market and reduces business risks. From January to September 2016, the company's operating income was 370 million yuan, a year-on-year decrease of 7.41%, and net profit was 41.866 million yuan, a year-on-year decrease of 5.04%.
With the upgrade of consumption, the growth space of the middle and high-end furniture market is more optimistic. As of September 2016, the per capita consumption expenditure of urban residents totaled 16,796 yuan, up 7% year-on-year, and still maintained a steady growth trend. With the increase in per capita consumption expenditure, the increase in urbanization rate and the trend of consumption upgrading in recent years, the medium and high-end furniture market has a certain room for growth. On the one hand, European furniture is also accepted and favored by consumers along with the development of the furniture industry, especially by the middle and upper income groups. When consumers choose European furniture, they need to use curtains, wallpapers and accessories to create a European-style living atmosphere. Therefore, consumers, especially middle- and high-income consumers, often purchase a set of furniture at a time to ensure the consistency of quality, style and environment, while promoting one-stop shopping. On the other hand, mid-to-high-end consumers are not sensitive to price, and are affected by brand barriers, technical barriers and financial barriers. The company has fewer competitors and a relatively loose competitive environment. The competition among enterprises is mainly brand and sales channels. competition.
The company has obvious competitive advantages in terms of channels, brands and product categories. Channel: The company is currently adopting a sales model of “direct sales + distributionâ€. As of the third quarter of 2016, the company has 30 directly operated stores in Beijing, Shanghai, Nanjing and other cities, and established 135 dealer stores in more than 80 economically developed cities, initially establishing a marketing network covering the developed cities of the country. Brand: The company brand “Yazhen†has a long history and a high reputation. At present, it has authorized the distribution of the top Italian furniture brand “Chelini†to open up the high-end furniture market and open up overseas markets in stages. Rich product categories: The company has 6 categories of products, including cabinets, bed sets, table categories, chair frames, sofas, etc., can provide consumers with nearly one hundred categories of furniture products, to meet consumers one stop Demand for purchase. In addition, the company has the foundation of a good furniture company, and it is expected that the company is expected to further expand its product category and develop towards the overall home and big home.
The fundraising project will strengthen the channel layout and the future growth will be expected. The plan is to issue 54.749 million shares. It is estimated that the total amount of funds raised will be 426 million yuan. A total of 630 million yuan will be used for the following five projects: 1) marketing network expansion project (416 million yuan), 2) sofa and furniture, etc. Expansion project (98.86 million yuan), 3) technical transformation project of furniture production line (579.903 million yuan), 4) information system construction project (29.76 million yuan), 5) home service cloud platform project (30.05 million yuan). The implementation of the fund-raising investment project will further expand and improve the layout and coverage of the company's sales network throughout the country, expand the company's brand awareness in the country, effectively improve product quality and production efficiency, improve the company's rapid response to the domestic market, and enhance the company's profitability. ability.
Earnings forecasts and investment advice. During the National Day of 2016, more than 15 first- and second-tier cities launched real estate control policies, including restrictions on purchases and credit tightening. Real estate sales may also be affected next year. However, the policy has limited impact on medium and high-end furniture manufacturers. The medium and high-end furniture mainly meets the rigid demand of residence. The high-end furniture companies benefit from the rigid demand of real estate and the rise of China's middle class, and in the process of slowing down the overall growth of the furniture industry, the brand effect is expected to increase market share. With the launch of future fundraising projects and the effective deployment of channels across the country, the company can achieve steady growth in the next three years. Based on this, it is estimated that the diluted EPS of the company in 2016-2018 is 0.38/0.41/0.43 yuan respectively. Considering that the average PE of the same industry in the same industry is about 34 times in 2017, the valuation in 2017 is 34 times, corresponding to the target price of 13.94 yuan.
Yihua Life: Domestic sales are on schedule, Huadali is in a smooth manner, and major shareholders continue to increase their holdings to show confidence
The effect of domestic sales began to appear, and the export continued to increase steadily, and the endogenous drive engine roared. (1) Domestic sales business began to force: In the first half of 2016, the company's domestic sales business began to gradually increase investment, vigorously tap the market potential and carry out online and offline multi-channel expansion. However, due to the lag in the revenue recognition of the large-scale theme marketing activities of the company's one-month “Yihua Life, You Think†in June, the 2016H1 domestic sales growth was conservative (7.47% yoy). In the third quarter, the domestic sales force effect began to appear. Among them, the 2016Q3 single quarter deducted Huadali domestic sales revenue increased by 27.76%, driving 2016Q1-3 deducting Huadali domestic sales revenue by 14.61%, returning to the double-digit growth range.
In addition, the company's balance of advance receipts at the end of the third quarter increased by 139.61% year-on-year to 146 million yuan, which is expected to mainly come from domestic sales orders. As the company further expands its life and home business and sales network, dealer development and store growth, etc., domestic sales growth The engine is expected to continue to roar.
The export business continued to increase steadily: the export business maintained a steady growth momentum in the first half of the year. In 2016Q3, Huadaoli deducted Huadaoli's export revenue by 867 million yuan, up 13.68% year-on-year; 2016Q1-3 deducted Huadaoli's export revenue of 2.48 billion yuan. The year-on-year increase was 11.56%, and the growth rate was basically the same as that in the first half of the year.
Huadali successfully consolidated the performance of the company: the company's acquisition of Huadali has been successful in September, and the performance of Huadali in 2015 is at the bottom of the history, only achieving a net profit of returning to the mother - 0.1 billion, since 2016 with the cowhide The cost savings brought about by the price decline and the exchange gains brought about by the depreciation of the Renminbi increased. Huadaoli’s performance began to rebound. In September, Huadali realized a net profit of 20.82 million after deducting compensation expenses, which brought about a thickening of performance.
Investment suggestion: The company's domestic sales growth in the third quarter was on schedule, and Huadali also successfully achieved consolidated results, which led to good growth in the third quarter. In the follow-up outlook, we continue to be optimistic about the huge potential of the Y+ ecosystem under the company's horizontal and vertical development strategy, as well as the performance growth of Huadali and the company's internal and external synergies. “Yihua Wood Industry†was renamed “Yihua Lifeâ€, and the new content of life The space is also open.
In 2016, it is assumed that the company's annual net profit after deducting Huadali is 700 million, a year-on-year increase of 15%. Huadali contributes a net profit of 67 million. It is estimated that the company's net profit for 2016-2017 will be 7.67 and 1.015 billion respectively. Corresponding to the 1.438 billion share capital, EPS is 0.52 and 0.68 yuan respectively, corresponding to PE of 22 and 16 times. The current total market value is 16.7 billion, and shareholders' shareholding increases confidence.
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