Category: Money tips Release Date: 2007-06-16
Accelerated urbanization and income increase and promote consumption upgrade has been a constant.
Cooking utensils and kitchen appliances in the field, we expect that both the replacement of traditional products, or new alternative products, its market demand in 2007 will continue to upgrade in the consumer driven continued to enlarge. A typical rice cooker and induction cooker sales data well illustrated this point.
Differentiation strategy + kitchen appliances product line extension, a three-year re-Supor
The company's core competencies focus on the following four points:
Innovative product differentiation strategy supported
Excellent management
Network marketing resources accumulated precipitation
In the domestic market, brand recognition and high reputation company will play the original on the basis of competitiveness in the international giants SEB in international sales channels and orders on support, which is by no means a simple reproduction, but on the basis of industrial structure optimization rapid growth.
Stock transfer, such as clarified will open the company's growth expectations.
Bone of contention in defining the scope of the market share calculation. Stock transfer, such as clarified will open the company's growth is expected to become a catalyst for propelling the stock.
Risk Warning: Product easy to imitate and follow
We believe that the companies can continue to differences in strategy, brand premium outlets advantage to maintain profitability.
Maintain the "Recommended" rating
Is expected to 06,07, and 2008 earnings per share 0.57,0.83,1.12 yuan, an additional issue after the completion diluted 0.46,0.68,0.91 yuan. A reasonable valuation range of 30-32 yuan, to maintain "recommended" rating.
Product structure optimization, kitchen appliances product line, further extension of the
While the company's main product is still cooking utensils and kitchen appliances, but its product mix has changed a lot, mainly reflected in two aspects, one product gross margins in the high cost of the case appeared to enhance the other is the kitchen appliances income a rapid growth, income ratios, and gross margin are characterized by growth.
In general, 1 and 4 quarter sales season, 2 and 3 quarters for the off-season, and we can be seen in Table 1, even in the off-season, the company still get a good margin improvement and optimization of product mix.
Company has given us the style show, in fact the company's future in the product structure optimization, kitchen appliances on the further extension of these two points there is a great space and the potential of the excavation, the typical products such as the following:
No fumes, and low oil Smokeless alternatives to traditional wok
Electric pressure cooker rice cooker and substitute a simple function of pressure cooker
Induction of traditional cooker and fire stove replacement
Extended to include kitchen appliances range hoods, stoves, disinfecting cabinets, drinking fountains, electric kettle, food processing machines, etc.
Industry Background: The consumption of a constant upgrade
Urbanization and an increase in income and promote consumption Upgrade
From the kitchen market point of view, China's market, the current annual sales of about 110 cooking billion, sales of about 300 million, equivalent to 300 million households a year on average for each family or a new purchase of a pot. From the sale of the regional point of view, a big gap between urban and rural markets, urban markets to department stores, hypermarkets with market maturity, the product tends to become increasingly smaller and smaller, the rising rate of high-end products, thus stimulating the adoption of new products updated kitchen there is a considerable potential. The rural market is still mainly in the low-end products, but because the population ratio in rural markets, large, the overall sales of more substantial, accounting for about 55% of the total production. With the acceleration of urbanization and people's income level increases, cooking utensils and a new acquisition of the replacement rate increases the total amount of kinds of demands will increase, spending a huge upgrade to the rural market potential for the consumer to upgrade.
Right kitchen appliances market, we determine the upgrading of kitchen appliances and new products, continued market demand for larger than expected, today's variety of kitchen appliances and the very different 10 years ago, the acceleration of urbanization and income levels increase brought about by Consumer product upgrade is to promote the upgrading of the inherent dynamism. We need only look at two typical products that you can feel this can be seen in Figure 1, even into the home of the rice cooker is the first product, the rising demand for replacement growth is still quite a lot, 06 1-10 rice cooker production in the month increased by 70%! Today's rice cooker in the heating mode, material selection, the diversity of cooking than in the past have been quite different, we expect the replacement of traditional products such as demand continued and in 2007 will continue to enlarge. As in China's fast-growing demand for new kitchen appliances, induction cooker, there is a growing awareness of his security, high-performance, leading to rapid amplification consumer demand, we have to judge the growth of the next two years about 60% (Figure 2)
We can see in Figure 3, the company in 2006 sales revenues in the first half wok has reached the year 2005 the amount of annual growth will exceed 100%. No fumes health wok, induction cooker烟锅General Tao Jing non-oil and other new products the company has brought rapid growth in sales, while profits also increased significantly, 07 and 08 is expected to continue to maintain high growth trend. A non-smoke wok is usually in the 300-400 yuan, compared to ordinary frying pan several times or even ten times, but still sought after by consumers, reflecting the improvement in income levels of consumers after a high-quality life and health needs of增加.
Induction on the company's sales growth also maintained a high state, the same revenue growth in 2006 will exceed 100%, while gross margins improved (Figure 4). Induction in foreign countries has actually a very mature product, now in the country also known for its safe, clean, efficient access to the favor of consumers, especially in the natural gas, liquefied petroleum gas prices circumstances. From another angle, the upgrade reflects the consumption of energy release.
Stock transfer, such as would open the company's growth is expected to become clearer
Trade-offs, selection: SEB became the controlling shareholder of
The company in August 2006 adopted, with the French SEB Strategic Investment Framework Agreement, will be transferred by agreement, and directed additional 4,000 shares, some offer ways to achieve access to the company's total share capital of the SEB acquired up to 61% of the stake transfer, issuance, and offer acquisitions prices are 18 yuan / share.
SEB cooking utensils and kitchen appliances as the world's giant in recent years, the performance increase is quite normal (Figure 5,6), in the Asia Pacific region, market development is also slow (Figure 7), face a similar product quality Chinese manufacturers continue to rise, the impact of low-cost, SEB is clearly the regional distribution of production cost is too high (Figure 8) had reductions in metropolitan France, closing some factories in Europe, closing plants will have to pay higher costs. 2006 January-June SEB Group's 1122 income of 1 million euros, an increase of 12%, but its operating profits for the -10 million euros.
And the SEB through the acquisition of companies to enter the Chinese market, access to low-cost manufacturing base and a wide range of sales channels, can be said to serve the dual purposes. SEB in recent years to demonstrate its sluggish performance and make full use of the company's low-cost manufacturing advantage of the completion of OEM, ODM orders, with the help of a high brand recognition in the domestic level, sound sales channels to get a good market in China and neighboring growth is expected, these two will bring new growth momentum SEB. We judge the company completed the acquisition of SEB in the layout of this important, the company will focus on the development of the Asia-Pacific region, making full use of its original strengths, based on further enhance its management, product innovation capabilities, to meet the international demand for its products ability to the final objective of developing the Asia-Pacific region marketing purposes.
Since the acquisition of China's domestic peer SEB's able to bring about open markets and increased opportunities for growth, SEB has long been looking for acquisition targets in China. For the company, although the cooking utensils and kitchen appliances in the domestic industry has to compete with a certain strength, but if SEB's acquisition of other companies to become a strong competitor, the pattern of domestic competition may be reversed, the company's leading status is greater threat than to allow SEB to become strategic partners. The biggest investment objective is to profit, the gains from growth perspective, despite the loss of selling a controlling stake, but in SEB to build a global marketing platform, the company will accelerate the growth of a world-class brands of cookware and kitchen appliances company, growth to improve access to the rights of revenue is expected to be more substantial. We therefore believe that SEB became the controlling shareholder of the company is noticeable Su Ze father and son on balance choices.
SEB acquisition of Supor, after the sale of shares in the Asian region will be from 7% to 15%.
Anti-monopoly point of contention in the calculation of market share
SEB's acquisition of the company's motion segments in the Ministry of Commerce approved the request has been peer application for antitrust investigations, mergers and acquisitions resulting in the smooth completion of twists and turns, the share price performance is resulting in inhibition. According to "On mergers and acquisitions of domestic enterprises by foreign investors provides that"第五十一? the following four conditions (up to one can be) constitute a declaration threshold:
M & A party to the domestic turnover of more than 1.5 billion yuan
Side the domestic market share of more than 20%
M & A lead party in the domestic market share reached 25%
1 year associated with mergers and acquisitions of domestic industry, enterprises amounted to more than 10.
1 and 4 conditions is certainly not in conformity with, the bone of contention in defining the scope of the market share calculation.
We believe that the stock transfer, such as clarified will open the company's growth is expected to become a catalyst for propelling the stock.
Differentiation strategy + industrial extension of a three-year re-Supor
Implementation of the strategy of differentiation allows the company to obtain the current status of industry leader cookware, kitchen appliances also been a rapid growth, but we are more concerned with the future development and growth. We believe that the company's core competencies focus on the following four points:
Innovative product differentiation strategy supported
Excellent management
Network marketing resources accumulated precipitation
In the domestic market, high brand recognition and reputation
Good looking and strategic planning capacity, we believe that the company will promote in the new capital injection, will continue to implement differentiation strategy, steadily expanding product lines, develop new markets, three years will re-a Supor. This is not a simple copy, but the industrial structure optimization based on the rapid growth.
Consumption upgrading in the context of differentiation strategy
In the highly competitive consumer market, the company whether it is involved in the cooking industry, at the earliest, or later into the kitchen appliances industry, through continuous differentiation strategy to obtain a better profit performance.
Revenues and gross profit in 2006 a noticeable upward trend in the previous Table 1 and Figure 3,4 The data has been verified. We believe that similar non-smoke health wok, electric pressure cooker, smart sub-heating rice cooker, ceramic-coated non-stick products such as the growth has only just begun.
Electric pressure cooker company's 2006 sales grew eight times, more than 1 million! Compound at the end, stainless steel pressure cooker, so sales growth also allows the company in 2006 three quarters in the general pressure cooker sales grew 30% year on year growth of 5% gross profit margin, so that the growth of traditional products for the pressure cooker that is not easy.
The further extension of kitchen appliances product lines to broaden the Supor brand content
The company has started a new production base in Shaoxing, with a total area of 430 acres, a 250 acre has entered the planning stage, is expected to be completed early in 2008, a quarter of production, before the two went into operation at the end of 2009. The production base will mainly be used for Induction (including the electromagnetic stoves), export home appliances, water dispenser series of home appliances and kitchen appliances (including range hoods, gas stoves, disinfecting cabinet, etc.) production.
The corresponding marketing co-ordination, the company has already planned to broaden the Supor brand connotation, he is not only brand-name cookware, but also the kitchen, health appliances, one of the brand of choice.
Investors often worry about the manufacturing companies with idle production capacity, we believe that companies will experience such a situation the chance is very small, on the one hand the idea of the company to extend product lines are not only last year, but well prepared and planning is to consider the market sales after new capacity; the other hand, the accession SEB export growth for the company to open a larger space. Companies, even current production capacity was unable to meet the current needs, the urgent need to increase. In addition, from our company's long-term tracking of view, every investment is doing a full market research conducted after the full talents, marketing strategies and other aspects of preparation,
The company's future revenue growth is expected as follows
2006: Yuhuan, Hangzhou, Wuhan, Dongguan production base of four production point of view, the output value of 20 billion
2007: The utilization rate increased, the case of the use of extended reach 3.0 billion.
2009: Shaoxing base to join, to reach 6 billion yuan.
Profit Forecast:
Profit forecast assumptions:
Cooking utensils and appliances revenue growth is expected to table two
Export growth is expected to reach 07 and 08 and may exceed 50% of
In 2006 in the case of rising costs, the company a quarter of the price of the products made adjustments, but in fact did not affect the company's product sales, although there are still 07 and in 2008 led to price competition and lower prices, as well as changes in material costs factors. We believe in product differentiation to increase profitability of the case are fully capable of mitigating and offsetting these negative factors. We expect gross margins in the 07 and in 2008 will remain a slight upward trend.
The company's expense ratio will be increased slightly, to promote new products, new market development, new production base put into use, it will increase the company's expense ratio. We believe that in order to long-term development, the initial cost of investment is necessary, although the short-term will reduce the profit increase, and in the long run it is poised for growth and nurturing of.
The total share capital of 176 million shares, issuance of 216 million shares after the completion.
Valuation Analysis
Is expected to 06,07, and 2008 earnings per share 0.57,0.83,1.12 yuan, an additional issue after the completion diluted 0.46,0.68,0.91 yuan.
We first use DCF discounted valuation, assuming that in 2010 the company's annual revenue growth from 2008 to 45 diminishing to 8%, the following findings:
From the small plates and compared with the industry's point of view, we think that a reasonable 35 times earnings, according to the company in 2008 after the issuance of dilutive terms of performance, comprehensive consideration, we think that a reasonable price in the 30-32 yuan.
To maintain the company's "recommended" rating.
Risk Tip:
Product easy to imitate and follow, giving rise to fierce price war and weaken profitability. Squeezed by the supermarkets selling link the RMB appreciation, resulting in increased costs. We believe that the companies can continue to differences in strategy, brand premium outlets advantage to maintain profitability.
The Ministry of Commerce approved the transfer of shares will reduce the event of changes in his company's growth expectations.
