\u3000\u3 Bohai Water Industry Co.Ltd(000605) 599 Beijing Caishikou Department Store Co.Ltd(605599) )
Deep cultivation in North China, China Gold first: the company won the title of “China Gold first” in 2004. It is the first batch of “China Time-honored” enterprises named by the Ministry of Commerce, backed by the state owned assets supervision and Administration Commission of Xicheng District, Beijing. The company focuses on gold products. In 2020, the revenue of gold products accounted for 95.93%. As of September 30, 2021, the company has set up 54 offline Direct stores (including Beijing head office), which is at the core of the company’s commercial layout. In 2020, the revenue of Beijing head office was 4.32 billion yuan, accounting for 69.09% of the total direct revenue and 61.12% of the total operating revenue.
The scale of the industry is growing steadily, and the concentration needs to be improved: China National Gold Group Gold Jewellery Co.Ltd(600916) jewelry retail sales growth has a strong correlation with GDP. From the perspective of market share, China is the largest jewelry consumption market in the world, with a market share of 38.02% in 2021. From the perspective of per capita jewelry consumption, China’s per capita jewelry consumption still has some room for improvement. According to Euromonitor statistics, China’s per capita jewelry consumption in 2021 was US $79.3, far lower than US $188.9, and there is still some room for growth. In terms of product categories, gold jewelry is still the mainstream jewelry consumer goods in China. In 2020, China National Gold Group Gold Jewellery Co.Ltd(600916) sales accounted for 53%, and jewelry gold was the main consumption of gold products, accounting for about 60% of gold consumption.
High cost performance cultivates users’ minds and intensively expands stores to ensure service quality: the company focuses on the direct sales model, provides customers with high-quality and consistent service experience, and has 33 service commitment systems covering pre-sales consultant, in-sales company and after-sales value-added. Cultivate users’ minds with high quality and low price. Caibai’s gross profit margin and sales expense rate are both low, and the price of gold is also low compared with the listed Jewelry Companies in the same industry. In terms of product quality, the company has formulated a more stringent quality order standard of “Caibai jewelry” than national and industrial standards.
Channel optimization and customized design open new increment: Based on the principle of “focusing on the integration of Beijing, Tianjin and Hebei and radiating major key cities”, the company expands and optimizes the company’s sales network. It plans to open 19 direct gold jewelry stores in North China and key cities in China from 2022 to 2023, including one museum experience store in Beijing, Set up 8 flagship stores and 10 standard stores in key cities in China. At the same time, upgrade the information platform, establish o2o system, open up the Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration and realize the optimization of all channels. Build a customization and design center to improve product customization and R & D capabilities, so as to improve product recognition.
Profit forecast, valuation and rating: we estimate that the total operating revenue of Beijing Caishikou Department Store Co.Ltd(605599) 20212023 will be 9.673/11.535/13.193 billion yuan, the net profit attributable to the parent company will be 4.19/4.86/561 million yuan, and the corresponding EPS will be 0.54/0.63/0.72 yuan. Based on the comprehensive relative valuation and absolute valuation method, the target price of the company will be 14.49 yuan, corresponding to 23 times of PE in 2022. The company will expand its stores through the direct operation mode, and the speed of opening stores is slow, As a time-honored brand in Beijing, it has a prominent competitive advantage in North China and is rated as “overweight” for the first time.
Risk tip: the expansion effect of Fuwai market is less than expected, the fluctuation of gold price is intensified, the proportion of revenue of Beijing head office is too high, and the risk of secondary new shares is high.
