Oppein Home Group Inc(603833) (603833)
In the context of the slowdown in real estate growth, the competition pattern of the home industry has been continuously optimized. The company has excellent fundamentals and strong performance certainty, and continues to consolidate its leading position in the industry by relying on the advantages of products and channels. In the future, under the layout of all channels and categories, the performance is expected to maintain rapid growth. First coverage, give buy rating.
Key points supporting rating
Lay out multi category channels and firmly take the lead in customization. The company started with kitchen cabinet business and expanded bathroom, wardrobe and wooden door business in 2003, 2006 and 2010 respectively. The CAGR of kitchen cabinet / wardrobe / bathroom / wooden door in recent five years is 9.5% / 34% / 37.9% / 44.7%. At the same time, the company took the lead in the layout of bulk and packaged business. In 2020, the revenue of bulk business was 2.68 billion, and the CAGR in recent five years was 41.9%. Relying on the performance of wardrobe and bulk business, the company’s revenue will achieve a contrarian growth of 8.9% in 2020. The company has built an omni channel, multi brand and full category layout, ensuring the long-term growth potential of the company and stabilizing its leading position.
Sufficient production capacity to ensure development, multi-dimensional product structure to build core advantages. The company’s nationwide capacity layout helps business expansion and improve operation efficiency. The company continued to sink its channels. As of 2021q3, the total number of stores was 7461, leading the industry. At the same time, the company sets strict investment threshold and daily assistance to improve the strength of dealers. Thanks to the support of high-quality dealers, the revenue of single kitchen and wardrobe store is significantly ahead of other companies in the industry. The company’s multi brand strategy has also maintained industry leadership. In 2020, the revenue of Opel’s single store was 927000 yuan, with a three-year compound growth rate of 25.9%, reflecting the improvement of market recognition of new brands.
The big home strategy boosted the retail end, and the engineering decoration channel grew rapidly. While promoting the big home strategy, the company introduced a strict assessment system to optimize the quality of dealers. Thanks to the promotion of big home, the kitchen and wardrobe business continues to expand the border and accelerate the retail end. In addition, the company arranged bulk and packaged businesses in advance and signed long-term cooperation agreements with poly, Greentown and other high-quality real estate developers. In 2020, the bulk business revenue was 2.68 billion yuan, a year-on-year increase of 24.1%, accounting for 18.2%. The revenue scale of the whole packaging business exceeded 1 billion yuan, with a year-on-year increase of 66%. Bulk business and packaged business are expected to maintain rapid growth.
Profit forecast and valuation
It is estimated that the company’s revenue from 2021 to 2023 will be 19.69/23.58/27.37 billion yuan respectively, and the net profit attributable to the parent company will be 27.4/33.6/4.05 billion yuan, corresponding to 30 / 24 / 20 times of PE respectively. The company continues to optimize store quality and expand new channels, which is expected to expand its own advantages. First coverage, give buy rating. Main risks of rating
The price of raw materials fluctuated, the industry competition intensified, and the expansion of new categories was less than expected.
