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Boss Electric (002508): The advantages of refined decoration channels are obvious

Boss Electric (002508): The advantages of refined decoration channels are obvious
The company’s recent situation On December 20th, we 天津夜网 studied the boss’s electrical leaders to understand the company’s recent operations.  Comments on 2H19 retail channel revenue decrease: 1) 1H19 retail channel decreased by more than 15%. The company expects that the 2H19 retail channel decreased by less than 10%, slightly improved, and dealer confidence recovered.2) The boss insists on high-end positioning and continues to push for new sales. The company does not expect a price war and the average retail price will continue to increase slightly.3) AVC data shows that in November 2019, the retail sales of chefs’ electric appliances will increase by +8 each time.2%.Benefiting from the “Double Eleven” promotion in November, the market performance improved.However, the growth rate of cost-effective brands has accelerated.For example, in November of the Midea chef ‘s wire, offline 武汉夜生活网 retail sales were + 31% and + 34% twice.Boss Electric is positioned at the high end, and retail sales growth in November was slower than the industry.4) We expect the speeding up of real estate delivery will be beneficial to the rebound in demand for kitchen appliances after the Spring Festival in 2020.  Engineering channels continue to contribute incremental: 1) 4Q19 bosses continued to maintain a high growth rate in engineering channels.The company estimates that the total sales of range hoods in 2019 will be about 2.8 million units, of which about 900,000 units will be sold in engineering channels, accounting for more than 30%.2) The company expects the engineering channel to maintain 40% in 2020?The 50% growth rate continued to increase as a percentage of the company’s revenue.The company plans to increase the gross profit margin of engineering channels by increasing the unit price of products and the supporting ratio of products in the engineering channels.3) Benefiting from the improvement in the penetration rate of refined decoration assets, Boss Electric’s 1Q-3Q19 engineering channel revenue doubled.Due to the decrease in the gross profit margin of engineering channel sales, there is downward pressure on the company’s gross profit margin.However, the engineering channel cost rate is low, and the company is expected to continue to maintain a high profit margin.  New product growth: 1) Among embedded products, the sales of steaming and baking integrated machines are better, but the supporting rate can still improve space.The company estimates that 150,000 steaming and baking machine sales in 2019, less than 5%.2) In 2020, the boss plans to invest in the refrigerator market, launch more models to seize market share, research and development, and production are done by the company itself.  It is estimated to maintain 2019 / 20e EPS forecast1.70 yuan / 1.92 yuan.Maintain Outperform rating, consider multi-year valuation conversion, raise target price by 11% to 39.00 yuan, corresponding to 23 times the 2019 price-earnings ratio and 20 2020 price-earnings ratio, compared with the current mainstream has 20% of upside.  The current contradiction corresponds to 19x / 17x P / E ratios in 2019/2020.  Risks: Prospects for the market demand for kitchen appliances; market demand instead of the risk of shifting to cost-effectiveness.