\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 828 Red Star Macalline Group Corporation Ltd(601828) )
Positioning as the leader of home chain stores, with steady growth in performance
Red Star Macalline Group Corporation Ltd(601828) is positioned as the largest omni-channel Pan home business platform service provider in China. As of 2021h1, the company has operated 93 self operated shopping malls and 276 entrusted shopping malls, operated 12 home shopping malls through strategic cooperation, and authorized 67 franchised home building materials projects in the form of franchise. The company ranks first in the industry in terms of business area, geographical coverage and market share.
The household industry is growing steadily, and the concentration needs to be improved
In terms of market scale, China’s home decoration and furniture market is broad, and multiple factors boost the prosperity of the industry. According to frost Sullivan, the industry retail sales CAGR is 6% from 2020 to 2024, and the retail sales will increase to 4.83 trillion in 2024; In terms of industry pattern, offline channels are the mainstream consumption scenario, chain home stores occupy the leading position, home channel providers are in a double giant pattern, and the leading market share is low.
Transform asset light operation, force the home decoration industry chain and embrace the new retail reform
① transformation of traditional stores to light assets: self operated business provides endogenous growth power, and entrusted business expands the extension income boundary. In recent years, it has transformed the “light assets, heavy operation” mode, transformed the stock shopping malls, and emphasized operation, including the parallel operation of three major stores, the landing of nine theme pavilions and the expansion of main high-quality brands; Expand incremental shopping malls and emphasize asset light. The number of theoretical shopping malls in the medium term can reach 749; ② Accelerate the integration of home decoration and home furnishing: the company established a decoration industry group in 2019 and promoted the decoration business to the first business. Relying on the three brand matrix, the company accelerated its entry into the Bureau and developed its own intelligent home decoration design cloud software, which made the performance of the home decoration sector brilliant; ③ Actively explore new retail: the company has successively cooperated with Tencent and Ali to build a home smart marketing platform imp, and introduced Ali’s technical support and business philosophy in the new retail field; ④ Effectively promote the policy of reducing leverage: the company’s equity investment in the household industry chain has entered a profit-making period, and divested and sold non core assets. In addition, the company’s financial leverage will continue to be optimized by raising funds to repay debts.
Investment advice and profit forecast
We expect the company to achieve operating revenue of 15.904 billion yuan, 17.489 billion yuan and 19.317 billion yuan from 2021 to 2023, and net profit attributable to parent company of 2.083 billion yuan, 2.753 billion yuan and 3.450 billion yuan, corresponding to EPS of 0.48, 0.63 and 0.79 yuan / share, and the current share price corresponding to PE of 17, 13 and 10 times. Based on the relative valuation method, considering that the company has the leading advantage in home stores, the company will be given 16 times PE in 2022, with the corresponding target price of 10.11 yuan. It will be covered for the first time and given a “buy” rating.
Risk tips
Digitization and new retail transformation are less than expected, the expansion of entrusted shopping malls is less than expected, the real estate market fluctuates, the risk of excessive fluctuation in the fair value of investment real estate, and the liquidity risk of current liability repayment
