Hangzhou Great Star Industrial Co.Ltd(002444) (002444)
The company is a leading Chinese enterprise specializing in the production and sales of hand tools. It has a history of more than 20 years and is firmly in the forefront of the hand tool industry in the world. Hand tools business is the main business of the company. The company also has storage cabinets, laser measuring instruments and other businesses. The company’s control is centralized, and the chairman holds the company.
The tool industry has a long history. The history of industry leader swk can be traced back to 1843. There are differences between electric tools and hand tools. The tool industry can be divided into hand tools and electric tools, which mainly have two differences: 1. There are differences in the use scenarios of hand tools and electric tools, which can not be completely replaced by each other. 2. The technical content of electric tools is high, and the price of single products is high. At the same time, there are many hand tool industries SKU, and the product pattern is relatively scattered.
In terms of industry scale and trend, in 2020, the scale of tool industry will be USD 67 billion and that of hand tool industry will be USD 25 billion. Swk and TTI are the leaders in the tool industry, and the overall industry share is focusing on the leader, Hangzhou Great Star Industrial Co.Ltd(002444) as the leader in China, they get rid of a certain position gap among competitors.
The demand of the tool industry is booming, and the supply chain depends on China. Downstream consumption scenarios are mainly consumer DIY, automobile maintenance, engineering construction and industrial fields, with booming demand. The epidemic has led to rapid growth in online sales, but offline business is still the focus. The overall supply chain of the tool industry depends on China, but under the background that the United States imposes tariffs on China, Southeast Asia has the advantage of low tariffs.
Hangzhou Great Star Industrial Co.Ltd(002444) is expected to obtain dividends from industry growth and pattern optimization. The first mover leaders in the industry do not give priority to hand tools when facing business trade-offs, resulting in weak growth of hand tools business of these overseas giants. Hangzhou Great Star Industrial Co.Ltd(002444) invest a lot of R & D expenses every year, develop more than 1000 new products every year, have decentralized production capacity supply in the upstream, own a large number of manufacturing plants, multi-channel sales in the downstream, and rapid growth of online sales. In the future, the company will continue to promote its own brand sales and use its own funds for M & A. in the process of continuously increasing its share, the company will irregularly enjoy the business scale expansion bonus brought by M & A.
Profit forecast and Valuation: Hangzhou Great Star Industrial Co.Ltd(002444) is the leader in the field of hand tools in China, corresponding to the continuous high prosperity in the downstream of the hand tool track, and the upstream production capacity is gradually concentrated in China. The company’s ODM business grew steadily, strategically continued to promote its own brand and overseas online business, and the proportion of its own brand continued to increase. At the same time, the company actively sought M & A opportunities and acquired well-known brands such as arrow, prime line and lista. In the future, the company is expected to continue to enjoy the manufacturing cost advantages of China and Southeast Asia, steadily improve its production capacity, cut into the power tool track, and continue to gain market share as a leader by relying on its understanding of tool category supply chain, channel, brand and R & D.
It is comprehensively estimated that the company’s revenue from 2021 to 2023 will be 10.46 billion yuan / 12.504 billion yuan / 13.744 billion yuan, and the net profit will be 1.396 billion yuan / 1.796 billion yuan / 2.033 billion yuan. Give 25 times PE in 2022, corresponding to the target price of 39.27 yuan.
Risk tips: risk of exchange rate fluctuation, risk of M & a falling short of expectations, risk of U.S. trade policy change with China, risk of insufficient transportation capacity, risk of rising raw material prices, and risk of repeated epidemic affecting production in Southeast Asia
