\u3000\u3 Shengda Resources Co.Ltd(000603) 899 Shanghai M&G Stationery Inc(603899) )
Shanghai M&G Stationery Inc(603899) is a leader in China’s stationery industry. It has the ability of “research, production and marketing”, and has a deep accumulation of channels, products and brands. Based on the strategy of “one body (traditional business) and two wings (kelip and retail stores)”, the company’s performance is stable and continues to grow. The overall impact of the “double reduction” policy is gradually weakened, and the “two wings” emerging businesses drive the company’s performance growth. In 2021, the company was in good operating condition, with a revenue of 17.607 billion yuan, a year-on-year increase of 34.0%, and a net profit attributable to the parent company of 1.52 billion yuan, a year-on-year increase of 20.9%.
The growth of China’s stationery industry is steady. Compared with overseas mature markets, the concentration of China’s stationery industry and per capita stationery consumption are low. In 2020, the scale of China’s stationery market reached 163.9 billion yuan, and in 20132020, the scale of China’s stationery CAGR reached 5.6%; The Cr5 market share of writing instruments in China is only 38.3%, compared with 62.3% in the United States, 63.6% in Japan and 66.4% in Canada. The concentration of China’s stationery market is relatively low. The competitiveness of stationery manufacturers dominated by OEM OEM mode is weak, and the leading share will continue to increase. Industrial concentration is the future trend of the stationery industry. The stationery industry is in the stage of simultaneous increase in volume and price. The improvement of urbanization drives the growth of stationery volume, and the upgrading of cultural and creative product matrix increases the product premium.
The brand, products and channels are three-dimensional cohesive force, and the moat continues to expand. Brand side: the brand matrix is diversified, the market share of market segments is increased, and it has been ranked first in the “top ten enterprises in China’s light industry pen industry” for nine consecutive years, and the brand position of Chenguang is consolidated; Product side: the four tracks of traditional business are steadily advancing, developing high-quality cultural and creative products, improving product added value, gradually developing products from medium and low-end to medium and high-end, continuously optimizing the structure, driving long-term performance growth, acquiring Ansuo brand to play a synergistic role, and further solidifying its position in the field of pen making; Qudaoduan: there are more than 80000 offline retail terminals, covering secondary and tertiary partners and major customers in 1200 cities; Develop e-commerce business online through Chenguang technology, launch Chenguang alliance app, and actively promote the company’s Omni channel strategy.
The rapid development of office direct sales and the gradual maturity of large retail stores. From 2014 to 2020, the revenue CAGR of Chenguang kelipu reached 78.6%. The sunshine centralized purchase policy drives the formation of the trend of government centralized purchase. The office centralized purchase market is broad and the concentration is low. Chenguang, as the leader of stationery, is conducive to developing government and enterprise customers with its comprehensive ability. The six central warehouses cover seven major areas in China. With its perfect integrated service ability, office direct sales is expected to maintain rapid growth; From 2014 to 2020, the revenue CAGR of large retail stores reached 68.8%. Large retail stores are the bridgehead of the company’s core business. Chenguang life hall is positioned as an upgraded version of traditional stationery stores, while Jiumu sundry club is positioned as a boutique cultural and creative store, joining in and opening stores to expand rapidly. It is planned to add 100 stores every year. With the improvement of operation capacity, human efficiency and floor efficiency, the business of large retail stores is expected to turn losses into profits, and the development prospect is expected.
Investment suggestion: it is estimated that the company will realize an operating revenue of RMB 17.607/21.582/25.343 billion from 2021 to 2023, a year-on-year increase of + 34.0% / 22.6% / 17.4%; The net profit attributable to the parent company is expected to be RMB 1.518/1.841/2.244 billion, a year-on-year increase of + 20.9% / 21.3% / 21.9%; The EPS is expected to be 1.64/1.98/2.42 yuan respectively, and the corresponding valuation is 31.2x/25.7x/21.1x respectively. The “buy” rating is given for the first coverage.
Risk warning: the cost of raw materials is rising; The birth rate has declined; Continuous academic burden reduction; Electronic office trend
