DEA shares (301177)
Investment logic
The new leader in diamond decoration shows high growth in revenue and performance: the company's main business is the sales of proposing diamond rings and wedding rings. Since 2020, the revenue and performance have increased significantly, and the revenue / net profit attributable to the parent achieved 2.465 billion yuan / 563 million yuan respectively, with a year-on-year increase of 48.06% / 113.44%. According to the performance forecast of the 21st year, the growth rate of revenue / net profit attributable to parent company reached 87.6% / 131.1% respectively, continuing the high growth trend.
Based on the focus of the market on the company, this paper carries out the following reflections: (1) in view of the growth space of the industry scale under the downward trend of marriage rate, we believe that the overall scale of the diamond industry is nearly 100 billion, and the increasing trend of concentration is obvious. The incremental population has strong consumption ability and high willingness, and the stock population is expected to expand new scenes; (2) As for whether the brand potential energy barrier is deep enough, we believe that the company initiates unique purchase rules around the brand connotation and provides a series of additional services. The pricing is 20% - 40% higher than that of similar competitive products, and the gross profit margin is stable at 70%, which reflects the brand power under strong pricing power; (3) The company adopts the brand driven customer acquisition mode, adopts differentiated business strategy, customized delivery mode, design and short video marketing to improve operation efficiency and performance.
Channel space calculation: the number of stores of the company is expected to reach more than 1600 in the future. By the end of 2020, the traditional jewelry brand Chow Tai Seng Jewellery Company Limited(002867) has 4189 stores; The number of Hengxin Xili and Leysen Jewelry Inc(603900) stores similar to the company's positioning is 716 / 587 respectively. We believe that the company's current store base is low, and it is expected to expand stores at a higher speed than its peers in the next few years. Under our calculation model, the total store opening space of the company will be 1611 in the future, including 312 first tier cities (accounting for 19%), 510 new first tier cities (32%), 498 second tier cities (31%), and 291 third and fourth tier cities (18%).
Profit forecast and investment suggestions
The company's profit and operating indicators are better than those of its peers. In the future, it will benefit from the revenue growth brought by accelerating the expansion of stores in blank areas, the improvement of store operation and the improvement of market share. It is estimated that the company's 21-23 revenue will be 4.62/61.0/7.98 billion yuan, an increase of 88% / 32% / 31% at the same time; The net profit attributable to the parent company was 1.30/16.7/2.13 billion yuan, an increase of 131% / 28% / 28%, corresponding to EPS of 3.25/4.16/5.33 yuan. 25 times PE in 22 years, with a target price of 104.07 yuan, and a "buy" rating for the first time.
Risk tips
The poor maintenance of brand value and purchase rules, the lack of operation and management ability caused by the rapid opening of stores, the acceleration of the decline in the number of marriages, the disappearance of flow dividends, and the lifting of the ban on restricted shares
