DEA shares (301177)
Emerging jewelry customization brands, which are emerging, are given a “buy” rating for the first time
DEA Co., Ltd. is an emerging jewelry brand focusing on customized marriage and love jewelry. We believe that the outstanding emotional expression needs of the younger generation of Chinese consumers have driven the continuous growth of diamond jewelry consumption for marriage and love. Relying on strong marketing ability and accurate positioning, the company grasps consumer demand, binds the theme of “true love”, deepens brand awareness and builds high barriers to competition; The customized product model and the expansion of asset light self operated stores are expected to drive sustained and high growth in the future. We expect the net profit attributable to the parent company from 2021 to 2023 to be 1.302/17.30/2.297 billion yuan, corresponding to EPS of 3.26/4.33/5.74 yuan, and the current share price corresponding to PE of 26.0/19.6/14.8 times. “Buy, cover” rating for the first time.
Diamond jewelry: the consumption potential of love and marriage scenes is large, which meets the emotional expression needs of young groups
In 2021, China’s diamond jewelry sales reached 60.5 billion yuan, which is rapidly recovering from the epidemic; In the future, China’s diamond consumption is expected to rise both in volume and price, benefiting from the deepening of diamond and love binding publicity (marriage demand) and the improvement of national consumption level (self pleasing demand). Through the analysis of the portraits of young consumers, we can see that love is still the yearning of the public. In the scene of marriage and love, the value of high-quality diamond products is becoming more and more prominent in terms of emotional expression and security. Facing young consumers, how to “understand, touch and resonate” has become the key to brand competition.
Build a new jewelry brand based on “people and goods yard”, and customize products and light asset expansion to drive high growth
As an emerging brand of jewelry customization in China, the company has established full consumer awareness in the scene of marriage and love, and “men can only customize one in their life” is deeply rooted in the hearts of the people. Based on the “people and goods yard”, the company creates a new paradigm of jewelry customization brand:
(1) “people”: focus on the love and marriage needs of the younger generation, deeply grasp the changing trend of traffic, efficiently spread and seize the minds of consumers with the help of short videos and other channels, and build brand barriers by selling emotional value rather than commodity value.
(2) “goods”: take customization as the core, highlight the personality and uniqueness in the love and marriage scene, deepen the brand image, and further enhance the profit space through value-added services; Deeply grasp the core of DTC mode to realize low inventory and high turnover.
(3) “market”: build an omni channel sales system, reach consumers in multiple ways online, and ensure brand image and service experience in all offline self operated stores; The company has excellent single store model, outstanding profitability and broad space for store expansion. In the long run, the company has established a distinctive brand image, established consumer awareness, customized product model and asset light self operated store expansion under the marriage scene, which is expected to drive the company’s sustained and high growth in the future.
Risk tips: repeated epidemic, intensified industry competition, less than expected franchise expansion, goodwill impairment risk, etc.
