Vantage Holdings (002035): Real estate improvement expected to strengthen company expectations
Performance Preview: 1Q19 net profit is expected to increase by 5% -10% per year. We expect 1Q19 operating income to decline by 2% -5% consecutively, and net profit to further increase by 5% -10%.
Focus points Why the market has significant expectations for real estate improvement: 1) On January 2, 2019, the policies of the first and second tier cities including Zhuhai, Qingdao, Guangzhou, Foshan, Foshan, Hangzhou, Fuyang, Shanghai and other cities were relaxed to varying degrees.The real estate market in first- and second-tier cities was affected by policies in 2017-2018, and the sales area shrank. Therefore, the market has strong expectations for the growth of first- and second-tier real estate sales after the relaxation of the restructuring policy.
2) The scale of off-plan houses sold in the third- and fourth-tier markets in 2017-2018 will accelerate the completion and delivery scale, which will also increase the demand for decoration in the future.
3) 80% of kitchen appliances demand comes from decoration needs.
Affected by the real estate cycle, the company’s operating income in 4Q18 dropped by 8 year-on-year.
Therefore, we expect the company’s revenue will probably improve gradually from 2H19.
Revenue in the first quarter decreased, but water heaters were the highlights: 1) About 70% of Vantage’s operating income came from large kitchen appliances.
AVC data shows that the retail volume of hood and gas stove markets in January-February 2019 were -18.
At 1%, sales volume is under pressure in the short term.
2) The retail market continues to decrease in the first quarter, mainly affected by three major factors: the impact of real estate in the late period, the replacement of real estate refined decoration to retail, the integration of stoves to range hoods, and the replacement of gas stoves.
3) The supporting sales base of Vantage water heaters has stabilized the company’s sales.
4Q18 company’s gas water heater online, offline retail sales exceeded 44.
0%, an industry with an obvious growth rate.
In AWE in 2019, Vantage showed the waterfall bath water heater (which can be remotely intervened by mobile phone APP) to further enhance the competitiveness of water heaters in 2019.
Continue to adhere to consumption upgrades, and profit is better than income: From January to February 2019, the company’s range hoods online and offline retail prices increased by +3 respectively.
2% to 2169 yuan, 3415 yuan, cited in the price of high-end kitchen appliances, there is room for price increases.
Estimates and recommendations maintain 2018/19/20 EPS forecast of 0.
78 yuan / 0.
88 yuan / 1.
Maintain the recommendation level. As the market’s expectations for real estate improve, the company 上海夜网论坛 estimates that it will raise its target price by 16% to 15.
33 yuan, corresponding to 20/17/15 times 2018/19 / 20eP / E.
The company currently expects 16/14/12 times 2018/19 / 20e P / E, and the target price currently reaches 24% of the upside.
Risk Market demand fluctuation risk.