\u3000\u3 China Vanke Co.Ltd(000002) 791 Guangdong Kinlong Hardware Products Co.Ltd(002791) )
Category + channel support performance is upward, and there is broad room for market share improvement in the future
As a leader in the listing of construction hardware, the company’s multi category and channel layout support high performance growth, and the market share is expected to increase: 1) in the short term, the sinking of direct sales channels and the expansion of categories are expected to help the company increase the market share in the construction hardware and construction accessories market exceeding trillion; 2) In the medium term, with the weakening demand for new real estate, the company will gradually develop new sales scenarios such as hospitals, hotels and schools in the future to realize the diversification of income structure; 3) In the long run, relying on the advantages of information platform construction and online channels, the company is expected to open up after-sales service and enhance customer stickiness, benchmark overseas leaders, and there is a wide space for the company to improve its per capita efficiency.
The category continues to expand, creating an integrated supply platform for building accessories
Relying on traditional building hardware, the company continues to extend to other building accessories, covering smart home, bathroom, waterproof, coating and other fields. It operates a total of 130 product categories and more than 20000 product SKUs. It is estimated that by 25 years, the traditional building hardware market will total 114.4 billion yuan, the CAGR in 22-25 years will be 4.73%, and the relevant supporting market is expected to reach trillion yuan. The company’s new categories continued to increase in volume, and its subsidiary Jianlang Hebes realized a net profit of 390 million yuan in 20 years, a year-on-year increase of + 57.2%; In terms of demand, the majority of small B customers in the industry have high demand for customized products. Through category expansion, the company can meet the one-stop procurement needs of small B customers; From the perspective of supply, the competition pattern of the construction hardware industry is scattered. As the industry leader, the market share of the company is only 7.4% (only considering the traditional construction hardware, if considering the multi category market, the actual market share is lower). In the future, it is expected to improve the industry concentration by virtue of the scale advantage, so as to improve the market share.
With the nationwide distribution of direct sales channels, the customer structure is expected to be diversified
The company has actively expanded markets at home and abroad. By the end of the year, it has more than 700 sales outlets and a sales team of more than 6500 people. The sales outlets have achieved full coverage in prefecture level cities except Tibet, and will continue to make efforts to the county market with high gross profit in the future; In terms of customer structure, the income from real estate accounted for about 60% in 21 years. The company is expected to rely on channel sinking to develop new integrated sales scenarios such as schools, hotels and hospitals, so as to reduce the proportion of real estate income, disperse capital risks and improve cash flow.
The efficiency of empowerment management of information platform can be improved, and the improvement of per capita efficiency can still be expected
In 2014, Oracle system was introduced into the United States to carry out information iterative upgrading earlier, which has a first mover advantage in supply chain management and information level. Build an “iron triangle” composed of “customer manager + product manager + service”, give full play to the advantages of teamwork, and compare home depot, Lloyd’s and Wurth, the company has the potential to grow into a platform leader. The per capita income generated in 201621 increased from 840000 / person to 1.5 million / person, compared with 3.13 million / person in WuErTe in 20 years. There is still much room for improvement in the future.
Start with hardware, not just hardware, and maintain the “buy” rating
As of 20 years ago, the company, as the leader in the construction hardware industry with the largest category of construction accessories among China’s A-share listed companies, has shown flexibility in performance growth with the gradual emergence of scale effect. We estimate that the company’s net profit attributable to the parent company in 21-23 years is RMB 9.0/11.5/1.56 billion respectively, and the corresponding EPS is RMB 2.80/3.58/4.86 respectively. Referring to the 22-year average pe23x of comparable companies, the company is approved to give the company a 22-year 35x PE, with the corresponding target price of RMB 125.3. It is covered for the first time and given a “buy” rating.
Risk tip: the real estate policy continues to tighten, the price of raw materials rises sharply, and the progress of category expansion is less than expected.