\u3000\u3 China Vanke Co.Ltd(000002) 444 Hangzhou Great Star Industrial Co.Ltd(002444) )
Event: on April 6, the company announced that it had obtained the customer’s purchase confirmation of electric tools.
Electric tools have been confirmed by major customers, and the annual order will not be less than 15 million US dollars in the next three years
The company’s 12V power tool products have been confirmed by a large retail company in the United States (company C, one of the company’s top five customers). The scope of procurement is the sales and service of all this type of products in 2000 stores in North America in the next three years. It is estimated that the order amount will not be less than 15 million US dollars per year, which currently exceeds 50% of the company’s power tool product revenue in 2020.
This order has little impact on the performance elasticity of the company, and we look forward to a new breakthrough in the power tool business in the future
Assuming that the net profit margin of the company’s power tool sales is equivalent to that of power tool giant Chuangke industry (8.32% in 2021), calculated at the exchange rate of 6.36 US dollars, the order will provide the company with a net profit of at least 7.93 million yuan per year in the next three years, accounting for about 0.6% of the median performance forecast of the company in 2021 (1.35 billion yuan); Supply in the second half of 2022, providing a net profit elasticity of about 4 million yuan, accounting for about 0.2% of our performance forecast in 2022. In the short term, this order has little impact on the company’s short-term performance, but in the medium and long term, we believe that this order for electric tools not only demonstrates the competitiveness of the electric tool business, but also reflects the customer synergy between the business and the hand tool business. In the future, the electric tool business is expected to benefit from the accumulation of customers in the hand tool field and make new breakthroughs in the order.
Substantial breakthroughs have been made after restarting the power tool business, and the business is expected to become the second growth pole in the medium and long term
In 2020, the company acquired Shop Vac, the subject matter related to electric tools, and restarted the electric tool business. At present, the company has the corresponding technical strength and mass production strength of electric tool products. This order is a substantial breakthrough made by the company after restarting its power tool business in 2020, marking that the company’s power tool products have reached the international peer level in cost performance and competitiveness. In 2021, the company’s revenue of power tools exceeded US $200 million, and the revenue of electric tools increased by more than 100% year-on-year. With the continuous development of product R & D and channels in the future, the power tool business is expected to become the second growth pole of the company’s performance in the medium and long term.
The expansion of the three business segments has made steady progress and is expected to maintain high growth in 2022!
1) tools business: power tools are expected to take over. In 2021, the revenue will exceed US $200 million, and the year-on-year growth of electric tools will exceed 100%;
2) laser measuring instruments: expand categories and optimize sales channels, with a year-on-year increase of more than 100% in 2021;
3) storage containers: the European epidemic recovered, and the US market received new orders from customers, with a year-on-year increase of 62% in 2021h1. Keelung, a newly acquired storage container company, joined the consolidation in July, which is expected to make the company the largest storage container company in the world.
Profit forecast
It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 14 / 17 / 2 billion respectively, with a year-on-year increase of 2% / 27% / 15%, corresponding to P / E14 / 11 / 9x. As the leader of hand tools in China, the company’s electric tool business continues to develop and is expected to become the second growth pole of the company’s future performance and maintain the company’s “buy” rating.
Risk tips
1) price fluctuation of raw materials; 2) The shipping situation continues to deteriorate; 3) Repeated outbreaks; 4) The development of power tools is less than expected
