\u3000\u3000 Monalisa Group Co.Ltd(002918) (002918)
Fast growing building ceramics enterprise
Since its establishment in 1992, the company has always focused on the R & D, production and sales of building ceramic products; Adhere to innovation first and grasp the consumption trend. The company’s Monalisa Group Co.Ltd(002918) and other brands have strong brand strength. The company’s equity incentive is in place to boost the rapid growth of performance. In 2020, the company achieved an operating revenue of RMB 4.864 billion, and the CAGR from 2014 to 2020 was 22.48%; The net profit attributable to the parent company was 566 million yuan, and the CAGR from 2014 to 2020 was 39.47%. In the first three quarters of 2021, the operating revenue reached 4.927 billion yuan, a year-on-year increase of 47.69%; The net profit attributable to the parent company was 417 million yuan, a year-on-year increase of 10.07%.
The mature market exceeds 100 billion, and the centralized trend is accelerated
China State Construction Engineering Corporation Limited(601668) the development of ceramic industry has entered a mature stage. The completion toughness of real estate will support the demand side of ceramic tiles, and the scale of ceramic tile market is about 300 billion yuan; The industry market concentration is low and highly decentralized, typical of “large industry and small company”; Compared with the market share of more than 50% of the leading enterprises in the ceramic tile industry in the United States, the market share of leading enterprises has great room for improvement. Under the catalysis of multiple factors, such as the stricter environmental protection policies, the clearance of backward enterprises, the concentration of downstream real estate industry and the increase of hardbound housing penetration, resulting in the increase of the proportion of b-end, the concentration of building ceramics industry is expected to accelerate. Leading enterprises with strong brand strength, product quality and capacity scale are expected to fully benefit.
Core competitiveness: excellent brand strength, capacity scale and sales channel
1) brand strength: the company’s thin and large-scale building ceramics technology is leading in the industry; The company innovates and develops a variety of high value-added building ceramic products, establishes a good reputation in the market and builds a strong brand strength. 2) Capacity advantage: by the end of 2020, the company’s ceramic tile production capacity reached 15.2 million square meters, with a capacity scale leading in the industry. It is expected that with the completion and operation of all production lines in Guangxi base, the scale effect of the company is expected to be further highlighted. 3) Sales channel: the company’s engineering and distribution business have developed in a balanced way, the b-end real estate customers are high-quality and stable, and the sinking space of C-end channel is still broad.
Investment advice
The building ceramics industry is highly dispersed, and there is still much room for improvement in the supply pattern. As the leading enterprise in the industry, the company will fully enjoy the dividends brought by the improvement of industry concentration; Meanwhile, the company’s brand, capacity and channel advantages are expected to continue to support the company’s high-quality growth. We expect that the net profit attributable to the parent company from 2021 to 2023 will be RMB 669 / 863 / 1066 million respectively, with a year-on-year increase of 18.12% / 28.96% / 23.54% respectively; The corresponding EPS is 1.61/2.08/2.57 yuan respectively; For the first time, give a “buy” rating.
Risk tips
Price fluctuation risk of raw materials and bulk commodities; Overdue risk of accounts receivable; Industry competition intensified, and the improvement of market concentration was less than expected.
