\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 828 Red Star Macalline Group Corporation Ltd(601828) )
Key investment points:
Red Star Red Star Macalline Group Corporation Ltd(601828) : China's leading home retail chain. Founded in 1986, the company has been deeply engaged in home retail for more than 30 years. Since its establishment, it has experienced three stages: Exploration and accumulation, accelerated expansion and transformation and upgrading. It has grown into a leading home decoration and furniture mall operator and Pan home business platform service provider in China. By the end of 2021, the company had 95 self operated shopping malls and 278 entrusted shopping malls, covering 30 provinces and 224 cities in China, with a total operating area of 20 million + square meters.
The market space of home decoration is broad, and multiple factors drive the prosperity upward. Household industry: 1) consumption upgrading: from 2011 to 2021, the per capita disposable income of residents increased rapidly, with a CAGR of 10.3%, promoting the consumption upgrading of household products. 2) Strong demand for reconstruction in the stock market (reconstruction of old houses): from 2018 to 2021, the growth of commercial housing sales in China slowed down, marking the arrival of the era of stock housing. The transaction heat of the second-hand housing market in the first and second tier cities has not decreased, and the proportion of second-hand housing generally exceeds 40%, giving birth to a large number of needs for the transformation, decoration and upgrading of old houses. 3) Urbanization drives incremental housing demand (new house decoration): the accelerated urbanization process superimposes favorable policies such as "going home to the countryside", giving birth to the vitality of home consumption in the sinking market, and the new house decoration market in low-line cities is expected to accelerate to be in line with the new first-line and second-line. The trillion market of home decoration industry continues to expand steadily: driven by the triple factors of consumption upgrading + demand for transformation and upgrading of stock market + demand for new house decoration in incremental market, the home decoration market has broad prospects and will continue to grow steadily in the future; According to the prediction of iResearch consulting, the market scale is expected to reach 3.78 trillion yuan in 2025, and the market scale CAGR will reach 7.6% from 2021 to 2025.
The competition pattern of home shopping malls is highly fragmented, and the proportion of leading cities needs to be improved. According to the statistics of China Furniture Association, as of 2021, there are 6647 Enterprises above Designated Size in the furniture industry, the market is highly fragmented, and small and medium-sized enterprises still dominate. In terms of retail sales, by 2021, the market share of Hongxing Red Star Macalline Group Corporation Ltd(601828) in the overall home shopping malls and chain home shopping malls has reached 7.4% / 17.5% respectively. The market share has long ranked first in the industry and has continued to increase in recent years. Home store leaders enjoy first mover advantages such as brands and channels, and are in a stable position. The chain home store leaders represented by Red Star Red Star Macalline Group Corporation Ltd(601828) , Easyhome New Retail Group Corporation Limited(000785) have accelerated horse racing and enclosure in recent years, and the leading advantage of store network continues to expand. In the future, the strong competition pattern will be strong, and the market share is expected to accelerate to focus on the leader.
Light pack helps to expand steadily, and brand + marketing strengthens its leading position. 1) Integration of home decoration and home furnishing and differentiated positioning of multiple brands: with the differentiated positioning of three strategic brands (Red Star Red Star Macalline Group Corporation Ltd(601828) , Europa and xingyijia), the company consolidates the first mover advantage of the first and second tier cities and accelerates the penetration into the sinking market. In addition, up to now, there are more than 31300 foreign product brands, covering kitchens, restaurants, bedding, sanitary ware, ceramic tiles and other categories. The product matrix is rich and matched with one-stop mall services to improve consumers' purchase efficiency and experience. 2) Light assets, heavy operation, rapid expansion, quality and efficiency improvement: the company has already realized the full layout of self operated shopping malls in the first and second tier cities, the rent growth is stable and predictable, and the self operated property focuses on assets and superimposes the brand effect to build a deep moat; Relying on the asset light operation mode of entrusted management, we will expand rapidly, reduce costs and expenses, and accelerate the penetration into low-level cities; The self operated business consolidated the basic performance, the entrusted business expanded the income boundary, and the two wheel drive helped firmly promote the nationwide layout. 3) Practice digital marketing reform and layout new retail channels in the same city: join hands with Tencent to build a full link marketing system from 2018; Starting from 2019, Alibaba has joined hands with Alibaba to explore new retail areas, and launched Wuxi Online Offline Communication Information Technology Co.Ltd(300959) local retail to reconstruct people, goods and markets at home. So far, the effect of digital transformation has been achieved, and the operation of enabling shopping malls has accelerated the upgrading.
Profit forecast and investment rating: the epidemic in 2020 has temporarily put pressure on performance, and the transformation in 2021 will promote the gradual restoration of profits; We are optimistic that in the future, with the continuous promotion of the transformation strategy of "reducing leverage, light assets and heavy operation", the company is expected to usher in the synchronous optimization of financial leverage and operation efficiency; It is estimated that the revenue from 2022 to 2024 will be RMB 17.350/19.05/20.625 billion respectively, with a year-on-year growth rate of 11.8% / 9.5% / 8.5% respectively; The net profit attributable to the parent company was RMB 2.616/3.310/3.923 billion respectively, with a year-on-year growth rate of 27.8% / 26.5% / 18.5% respectively. According to the closing price on April 13, the corresponding dynamic PE is 13 / 10 / 9x respectively, and the "buy" rating is given for the first coverage.
Risk warning: the expansion of shopping malls is not as expected; The profit and loss fluctuation of changes in fair value is greater than expected; Financial leverage risk; Risk of increased competition; The recovery of market demand is less than expected; Foreign companies in China are not fully comparable, and the relevant materials and data of benchmarking are only for reference.
