Chenguang Co., Ltd. ( Shanghai M&G Stationery Inc(603899) )
We believe that looking at the whole consumer industry, the leading companies of Volkswagen stationery track have high scarcity. The supply chain barriers built by channel barriers and multi SKU operation capacity are deep, and it is difficult to easily surpass or cross-border attack in the short term. This is the foundation for the rapid development of the enterprise in the future, and also constitutes the basic sector of long-term investment value. At the same time, the company actively responds to the changes of the industry, puts forward new strategies of high-end and tob, and makes steady progress, Bring new growth points for the future. In 2021, the company realized revenue / net profit attributable to parent company of RMB 17.61/1.52 billion, and CAGR of the past three years was 27.3% / 23.5%.
Moat: 1) strong channel strength: store Recruitment & Pyramid channel management mode, continuous fine operation, strengthened channel empowerment, and the terminal covers more than 80000 stores. 2) Strong category management: promote new products with the help of big and small learning flood, and continuously optimize the promotion efficiency. At the same time, extend the categories such as this book, office and ER Mei, and improve the management and control efficiency of SKU through shelf promotion, empowerment, informatization and other help channels. Based on the efficient channel model and strong brand premium, roe remained at 24-27% as a whole.
New highlights: under the background that the macro variables of the industry are worried by the market, the company actively responds to the new growth drivers: driver 1: three-dimensional efforts of products, marketing and channels to promote high-end upgrading. Product end function design & IP co branding to improve the price band and lead the development of high-quality cultural innovation; Through the operation of medium and high-end retail stores, as of 21 years ago, the company has 60 / 463 living halls / Jiumu sundries agency, and the losses of large retail stores have been greatly reduced. Drive 2: tob centralized purchase, with the scale maintaining rapid growth, the upward path of net interest rate is clear. ① Growth: in 19 / 20 / 21, the revenue growth rate of klip was 41.5% / 36.7% / 55.3% respectively. It is expected that with the increase of key customer share of extension customer (n) + extension category, the revenue side is expected to continue the rapid growth trend. ② Profitability: efficient turnover roe has a good performance, and the path of driving the net interest rate upward is clear through the change of scale effect and terminal service mode. The net interest rate in 19 / 20 / 21 is 2.1% / 2.9% / 3.1% respectively.
Investment advice
We estimate that the net profit attributable to the parent company in 20222024 will be RMB 1.82/21.9/2.63 billion respectively, with a year-on-year increase of 19.7% / 20.7% / 19.8%. Using the P / E relative valuation method, the current stock price corresponds to P / E of 25 / 21 / 17x. We give the company a target valuation of 30xpe in 2023, corresponding to the target price of RMB 70.9 in 2023. Considering that the market’s previous pessimistic expectations about the double reduction policy and the epidemic situation have been fully reflected, it is currently at the bottom of the historical valuation range, “Buy” rating is given for the first time.
Risk tips
Double reduction and economic downturn lead to pressure on industry demand; The intensified competition of office centralized purchase leads to the decline of profitability; The continuing epidemic has led to a decline in the passenger flow of school side stores and large retail stores.
