Xilinmen (603008): Strategic shift to intensive cultivation and independent brand performance
Core Views The focus of Xilinmen’s strategy in 2019 has changed from “seeking rapid market share increase” to “intensive farming and seeking for progress”. The business operations have continued to improve, and revenue in the first three quarters has increased.
1% to 33.
500 million US dollars, net profit attributable to mothers increased by 80 per year.
3% to 2.
We believe that the quality of the company’s channels has continued to improve, the improvement of operations after the transformation of the film and television business, and the increase in shareholders and shareholders after the completion of the conversion by Huayi Debt, and the company ‘s fundamentals are expected to usher in an inflection point.
The EPS in 2021 is 1.
51 yuan, maintain “Buy” rating.
The operation continued to improve, and the profitability rebounded significantly in the first half of the year. Looking at the quarter, Xilinmen’s 19Q1 / Q2 / Q3 revenue growth rates were -6% / 26% / 17% multiple times.
In the first three quarters, the gross profit margin increased short-term3.
7 points to 35.
1%, the adjustment range is high. The proportion of self-owned brand business with high gross profit margins has increased. The adjustment range has benefited from the downward movement of the main raw material TDI price center and the replacement tax reduction bonus.
In terms of expenses, in 2018, Xilinmen was shortlisted in the CCTV national brand plan. The use of one-time advertising and publicity expenses decreased, and the company’s expenses were more accurately invested in 2019. The sales expense ratio in the first three quarters decreased by 0.
2 points to 16.
5%, the scale effect of subsequent cost rate adjustment will gradually increase more downside.
In the first three quarters, the growth rate of net interest rate increased by 3pct to 9%, and profitability increased significantly.
Strategy shifts to refined management, independent brand performance shines in 2019 Xilinmen’s strategic focus shifts to “intensive farming, seeking for progress”, benefiting from the improvement of KA channel opening and operation quality, the promotion of large-scale promotion activities, continuous promotion of the distribution model, and the independent brand performanceAt present, in the first three quarters of 2019, the revenue of independent brands + Milan Impressions has increased by about 18% each year. We expect that the growth rate of independent brands in the third quarter alone will be about 30%.
In terms of OEM business, the production bases in Thailand and Vietnam have been successfully put into operation and reorganized, which is conducive to the steady development of the company’s foundry business in Southeast Asia and the United States.
In addition, the film and television business adjusted its development strategy 都市夜网 in a timely manner after experiencing the industry’s cold winter in 2018, and its operations improved, achieving revenue in the first three quarters1.
The company expects that there is no risk of continued impairment of goodwill.
Huayi Deliverable Bonds successfully completed the conversion, and the controlling shareholder’s shareholders were stable. In 2016, Huayi Investment issued a total of four 100% debenture bonds. According to the company’s announcement, from September 11 to September 27, 2019, the company gradually receivedTo the controlling shareholder Huayi Investment regarding the exchange of corporate bond exchange notice, as of September 27, Huayi Investment’s exchangeable corporate bonds have been completely converted, a total of 88.34 million shares were converted, accounting for 22 of the company’s total 四川耍耍网 share capital.
37%, the company’s controlling shareholder and actual controller have not changed.
According to the company’s three quarterly report, as of September 30, 2019, the company’s controlling shareholder, Huayi Investment, and Hangzhou Zhijiang, the parties acting in concert, held a total of 30% of the company’s total share capital.
79%, significantly higher than the third largest shareholder Gujia Household, the controlling shareholder is affiliated.
The performance of independent brands is dazzling, and the turning point of fundamentals is apparent. Maintaining the “Buy” rating. Xilinmen ‘s independent brand performance is dazzling. The OEM business has developed steadily, the film and television business has improved, and the controlling shareholder has further stabilized.
The net profit attributable to mothers will be 4 in 2021.
960,000 yuan, corresponding to an EPS of 1.
With reference to the average PE of 16 times in 2019 for a comparable company, the company is given an estimate of 16-17 times in 2019, and the corresponding target price range is 16.
68 yuan, maintain “Buy” rating.
Risk warning: Real estate sales are less than expected, raw material prices have risen sharply, and film and television businesses have fallen short of expectations.