Mona LisaSince the listing, the road to capacity expansion has been continuously opened. It is expected that in 2022, it will achieve more than twice the growth of its own production capacity and support the income scale of more than tens of billions. As one of the first ceramic tile companies in the industry to enter the developer’s centralized procurement directory, the company has the first-mover advantage of the B-end. At the same time, it has adhered to the innovation-led competitive strategy for many years, and the C-end has R&D and product advantages. The new equity incentive plan also demonstrates the company’s confidence in future growth. We maintain the company’s “Buy” rating and target price of RMB 46.75.
Revenue growth and cost reduction due to capacity expansion. (1) Innovative environmental protection and differentiated competition strategy.due toMona LisaThe production line of the old factory area is small and does not have cost advantages. Therefore, it has chosen the differentiated competitive strategy of innovation and green environmental protection, with R&D and product advantages. (2) 2020 may be the first year of company growth.
In 2020, the company put forward the strategy of “leading in scale”, which opened the way for the expansion of the production base in Teng County, Guangxi.According to the plan, the Tengxian base has a total of 11 production lines with a total production capacity of 88 million square meters, which will be put into operation in early 2020-2022. At the same time, the company will start production in Gaoan, Jiangxi in 2021.M&AWith a production capacity of 40 million square meters, the company’s own production capacity will be close to 200 million square meters after all the production capacity is reached in the future, and some OEM production capacity will be enough to support a revenue scale of more than 10 billion yuan. (3) Regional layout and single-line scale help the company reduce costs and increase efficiency. The ceramic tile industry has certain resource attributes and needs the support of the surrounding industrial clusters. Guangxi Teng County and Jiangxi Gaoan are the main ceramic tile producing areas, and the government supports the industry strongly, which will help the company save costs such as raw materials, logistics, and taxes. In addition, the layout of the new production base is conducive to reducing the company’s transportation radius and saving transportation costs. On the other hand, the company’s new production line is large in scale and has the advantage of large-scale production, which will result in significant cost savings compared to the small production line in the original factory.
The C-end is still in the channel layout period, and reserves mid- and long-term competitiveness. The number of C-end leading Dongpeng and Marco Polo stores in the industry is about 5,000, and the product distribution system has covered most provinces and cities and most county-level cities;Mona LisaAt present, there are about 2500 specialty stores (as of June 2021), and there is still a lot of room for improvement compared with industry leaders. The company plans to add 350 to 550 retail stores every year, continue to increase the terminal coverage density, fully sink and dig deep into the third and fourth tier market channels, and penetrate into the blank markets in the central and western regions. It is expected that the scale of specialty stores will reach 4500-5000 in the medium term. , Supporting the company’s revenue growth. And considering that the scale of updating the stock of real estate-related building materials will continue to expand in the future, the layout of channels will also help enhance the company’s competitiveness in the stock market.
Risk factors: slower-than-expected growth in real estate completion; risk of bad debts in accounts receivable; less than expected production capacity.
Investment advice: The company is a high-quality enterprise in the ceramic tile industry, with advantages in products, channels, and brands. The expansion of production capacity has brought about an increase in revenue and a decrease in costs, and the market share is expected to further increase. We are optimistic about the company’s future growth.
Maintain the return to the mother in 2021-2023Net profitThe forecast is 7.63/10.13/1.260 billion yuan, which corresponds to EPS 1.86/2.47/3.08 yuan.Maintain target price of 47 yuan and maintain “Buy” rating
(Article Source:CITIC SecuritiesCo., Ltd.)
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