Zhejiang Meida (002677) Commentary Report: Integrated stoves continue to squeeze the channels of traditional cigarette machine companies and there is still room for growth

Zhejiang Meida (002677) Commentary Report: Integrated stoves continue to squeeze the channels of traditional cigarette machine companies and there is still room for growth

Events: (1) The first quarter report of the Chinese home appliance industry in 2019 released by the National Appliance Industry Information Center showed that the retail sales of domestic integrated stoves in the first quarter of 2019 were US $ 3.5 billion, an annual increase of 45.


(2) The company released the 2018 annual report. In 2018, the company’s operating income was 1.4 billion US dollars, an increase of 36 in ten years.

5%; net profit attributable to mother 3.

80,000 yuan, an increase of 23 in ten years.

7%; net profit after deduction to mother 3.

700 million, an increase of 33 in ten years.


The company released the first quarter report of 2019, and the company’s operating income for the first quarter of 20192.

90,000 yuan, an increase of 31 in ten years.

6%; net profit attributable to mother 0.

80,000 yuan, an annual increase of 22.

1%; net profit after deduction is 0.

7 ppm, an increase of 21 in ten years.


Opinion: The integrated stove industry continues to grow, and retail sales are expected to grow by 30% this year.

(1) According to the data of integrated stove network and Zhongyikang Hefeng, the retail volume of integrated stove market in 2018 was 1.75 million units, an increase of 38%, and the retail value was 12.9 billion, an increase of 43.

9%; the retail volume of traditional (narrow sense) cigarette makers is 19.28 million, a decrease of 16.

1%; retail sales of generalized smoke machines (fog machines + integrated stoves) are 21.03 million units, a decrease of 13 each year.


(2) The proportion of integrated stoves in generalized smoke machines8.

3% (5.

2%, 2017), an increase of 3 from the previous year.


Integrated stoves continue to squeeze the share of traditional hoods due to three major advantages.

(3) The smoke stove industry is significantly affected by the land cycle. We expect that commercial housing will have a small peak in delivery in 2019, and (generalized) smoke machine growth will be better than market expectations.(Left and right) is the last year. In 2021, the generalized smoke machine may have a delayed offset.

We expect the growth rate of generalized fog machines to be 5 in 2019-2021.

1%, 4%, -7.

4%, the retail volume was 22.11 million units, 23 million units, 21.29 million units.

We estimate that the proportion of integrated stoves in general hoods will be about 10 in the next three years.

3%, 12.

3%, 14.

3%, the retail sales of integrated stoves were 2.28 million units, 2.83 million units, 3.05 million units, with a growth rate of 30.

4%, 24.

2%, 7.


The channel advantage is obvious, the growth space is breakthrough, and the company’s overall market share is expected to rise steadily.
(1) According to the 2018 annual report, the company added nearly 200 first-tier dealers in 2018, reaching 1,300 tons, a growth rate of 18.

The company added more than 400 terminal stores in 2018, reaching nearly 2,500, a growth rate of 19%.

In comparison, the company has obvious advantages in offline channels.

(2) In 2018, the company has entered well-known home chain stores and home appliance stores such as Gome, Suning, Red Star Macalline, Actually Home and so on.

At the same time, the company further lays out first- and second-tier markets.

We believe that the development of household and appliance chains, as well as the development of first- and second-tier cities, will become the company’s largest growth point in the future.

(3) In terms of online channels, in 2018, Martians led the market with a 24% market share, and the company’s market share decreased by 10%. There is still room for growth.

(4) According to the data of Zhongyikang, the offline retail volume of the integrated stove industry now accounts for 82%.

We estimate the company’s overall market share in 2018 to be approximately 17.

2% (Zhong Yikang data caliber), we think the company’s overall city share tends to rise steadily.

The trial production of new production capacity in 2019 will increase production capacity by nearly 1.

5 times.

(1) According to the company announcement and 杭州桑拿 the 2018 annual report, the company launched an annual project of 1.1 million new integrated stoves and high-end kitchen appliances in November 2017 (800,000 integrated stoves + 300,000 electric steamers, electric ovens, and dishesMachinery, etc.), trial production is expected in the first half of 2019.

The company’s current production capacity is 550,000 units / year, and the production capacity has increased by nearly 1.

5 times.

Multi-channel advertising is conducive to the development of first- and second-tier markets.

(1) Company selling expenses in 2018 1.

500 million, an annual increase of 53.


Among them, advertising expenses are 1.

1 trillion, the proportion of advertising costs to operating income has continued to increase in the past three years.

The distribution channels mainly include CCTV,北京夜生活网 local satellite television, outdoor anti-aircraft artillery targeted advertisements, and title advertisements for high-speed rail lines such as the Beijing-Guangzhou line and the Beijing-Shanghai line.

(2) The company’s selling expenses in the first quarter of 2019 were zero.

4.5 billion, an increase of 92 in ten years.

2%, continue to increase high-speed rail, anti-aircraft guns, new media and other advertising efforts, which will help the company’s first- and second-tier market expansion.

We expect the annual sales expense ratio to increase from last year.

Earnings forecasts and estimates We expect the company’s revenue growth to be 36 in 2019-2021.

8%, 28.

8%, 14.

5%, net profit growth rate was 34.

6%, 27.

8%, 10.

8%, EPS is 0.

79, 1.

00, 1.

11 yuan, corresponding to PE17, 13, 12 times.

We follow 21 of the 2019 EPS.

6 times the estimate, the estimated estimate is 17.
06 yuan, compared with 13 in 20190524.

There is a 29% increase in the price of 22 yuan, and we maintain the “strongly recommended” level.
Risk Tips 1. If the national housing delivery progress exceeds expectations, the cigarette machine industry will grow faster than expected this year; 2. The integrated stove industry is not occupying the traditional cigarette machine market at a faster pace than expected; 3. Market competition is intensifying and the average industry price is fallingRisks, and the company’s market share has a downside risk.