\u3000\u3 China Vanke Co.Ltd(000002) 043 Dehua Tb New Decoration Material Co.Ltd(002043) )
The influence of leading brands of decorative board is prominent, the layout of finished home has achieved remarkable results, and the performance has increased Dehua Tb New Decoration Material Co.Ltd(002043) is a leading supplier in China’s decorative sector industry, with rich product system, superior environmental protection and physical performance, prominent brand influence and leading position in the environmental protection sector industry. At the same time, the company has entered the field of customized home, and the business layout of the whole industrial chain has achieved remarkable results. By opening stores, developing dealers and purchasing, the company has carried out diversified channel development and construction of decorative sector and customized home business. At the same time, it continues to carry out product innovation and upgrading, continuously improves its comprehensive strength, the two businesses go hand in hand, and the revenue performance increases rapidly. In 2021, it is expected to achieve a revenue of 9.503 billion yuan, a year-on-year increase of 46.98%, a revenue CAGR of 28.84% in 20162021, a net profit attributable to the parent company of 716 million yuan in 2021, a year-on-year increase of 77.82%, and a CAGR of 22.47% in 20162021.
High quality sectors create brand reputation, and diversified channel layout helps to improve the market share Dehua Tb New Decoration Material Co.Ltd(002043) sector products have outstanding performance, continuous product upgrading, strong brand reputation, and adopt OEM supply mode to break through production capacity and regional restrictions. Based on the traditional C-end retail channels, the company carries out diversified channel construction, focuses on promoting the layout of “small b-end” business channels such as home decoration companies and furniture factories, cultivates large b-end business through engineering agents, and comprehensively introduces the branch management mode to help dealer management and market development, so as to steadily implement the easy decoration business mode. The company has achieved remarkable results in channel construction. According to the performance express, the revenue of decorative sectors is expected to increase by 53.16% year-on-year in 2021. At present, the competition pattern of the sector industry is scattered. With the company continuously enhancing its product strength and continuously promoting the layout of multiple channels, the market share can be improved in the future.
Entering the customized home has significant differentiation advantages, and the “retail + engineering” two wheel drive strategy has been effective. In 2015, the company put forward the whole house customization strategy, officially entered the field of customized home, created differentiated competition by relying on its own high-quality board products, adopted the “retail + engineering” two wheel drive development strategy, and made efforts in the retail home and engineering home sectors at the same time. Retail home stores continue to integrate and upgrade. With the continuous improvement of appearance design, delivery and installation service capacity, the business scale is expected to achieve rapid development. In 2020 and 2021, the company acquired 70% and 25% equity of Yufeng Hantang, a high-quality real estate and home furnishing engineering company, continued to overweight the engineering home furnishing business, and expanded the development of big b-end engineering home furnishing business with the help of Yufeng Hantang’s brand and resource advantages in real estate and home furnishing. The scale of customized home furnishing business of the company has grown rapidly, with revenue increasing from 298 million yuan in 2016 to 2.687 billion yuan in 2021, and CAGR up to 55.28%, of which the year-on-year growth in 2020 and 2021 is 327.86% and 35.08% respectively, and it is expected to continue to grow in the future.
The improvement of hardcover rate and the decoration of existing houses create the demand for customized home, and the concentration of sector industry can be improved. Hardbound housing has become an inevitable trend in the national real estate market. At present, the penetration rate of hardbound housing in China is about 30%, and there is broad room for improvement. Recently, there is a strong voice for the healthy and stable development of the real estate industry. The opening number of hardbound housing is expected to increase in the coming years, and continue to create the demand for engineering homes at the real estate end. At the same time, the era of old house renovation is coming, the transaction scale of second-hand houses is considerable, the demand for reloading is strong, and there is sufficient space for the customized home industry. As an important decorative main material, the output, sales volume and output value of wood-based panel generally maintain a steady and continuous growth trend. Under the background of the improvement of real estate hardcover rate and the gradual release of stock decoration demand, the market scale of wood-based panel is expected to continue to expand in the future. At present, the competition pattern of the sector industry is extremely scattered, the stricter environmental protection requirements, the enhancement of consumers’ brand awareness and the trend of customers changing to b-end will help the market share concentrate on the top brands.
The profitability is stable, the operating cash flow is excellent, and the high proportion of cash dividends highlights the long-term investment value. The company’s profitability is relatively stable and its operating cash flow performance is excellent. In 2020, the net inflow is 813 million yuan, reflecting the “cash cow” advantage of C-end business. At the end of 2020, the funds in hand are 703 million yuan, and sufficient funds support long-term development. In 2021, the company issued the restricted stock incentive plan, and the unlocking conditions assessed the company’s objective as taking the deduction of non net profit in 2021 as the base, and the growth rate of net profit (after adjustment) in 2022, 2023 and 2024 shall not be less than 20%, 45% and 75% respectively. Since 2018, the company has successively implemented share repurchase, which shows its confidence in future development. According to the shareholder return plan for the next three years (20212023) released by the company, the planned annual cash distribution profit accounts for up to 50%, and the company’s long-term investment value advantage is prominent.
Investment suggestion: the company is a leading enterprise in the field of decorative sector, with prominent brand influence and rapid expansion of business scale. At the same time, it enters the field of customized home and carries out the layout of the whole industrial chain, with obvious differentiation advantages. Based on the traditional distribution and retail, the company has diversified channels to help the growth of sector sales business. By adopting the “retail + engineering” two wheel drive strategy, the company has vigorously expanded the customized home business segment with remarkable results. The company’s decorative board and customized home business went hand in hand, and its performance improved rapidly. With the increase of hardcover penetration rate, the gradual release of the decoration demand of stock houses, the created market space of the home industry, and the increasing trend of industry concentration, the company, as a leader in high-quality board and a rookie in customized home, is expected to fully benefit. At present, we are optimistic about the company’s future growth space and investment value. It is estimated that the company’s total revenue from 2021 to 2023 will be 9.503 billion yuan, 11.537 billion yuan and 14.114 billion yuan respectively, with a year-on-year increase of 46.97%, 21.41% and 22.33% respectively, and the net profit attributable to the parent company will be 716 million yuan, 832 million yuan and 1056 million yuan respectively, with a year-on-year increase of 77.8%, 16.2% and 26.9% respectively; EPS is 0.93 yuan, 1.08 yuan and 1.37 yuan respectively, dynamic PE is 11.7 times, 10.0 times and 7.9 times respectively, Pb is 3.6 times, 3.0 times and 2.2 times respectively, and the “Buy-A” rating is given for the first time. The target price is 15 yuan.
Risk warning: the epidemic prevention and control is not as expected; The implementation of the policy is less than expected; Channel expansion management is less than expected; Customized home business development is less than expected; Market development is less than expected; Industry competition intensifies; Product upgrade is less than expected; The price of raw materials has risen sharply
