Gujia Home (603816) Company Review: Release of Distributor Shareholding Plan to Create a Community of Interests

Gujia Home (603816) Company Review: Release of Distributor Shareholding Plan to Create a Community of Interests
Event: Gujia Home Furnishing Dealer’s Shareholding Plan: The company’s dealer plans to increase the company’s shares by 120-200 million within 6 months (corresponding to the current price of 47.41 yuan / share can increase 2.11 million-4.22 million shares), share the company’s development results, and realize the combination of the company’s long-term development and the interests of dealers.The main body of this increase is the private equity fund affiliated to Shanghai Yingshui Investment that the dealer participated in the subscription. The increase of the holding does not set a price range.Point and price, choose the opportunity to implement. The company repurchases-executives increase-dealers hold shares, 北京桑拿洗浴保健 from core executives to channel dealers, to build a community of interests.The company introduced a US $ 300-600 million repurchase program in September 2019 for equity incentives, and in December 2019 disclosed core stock executives’ US $ 120-200 million stock increase plans, combined with this distributorThe company’s shareholding plan has deepened interest linkage from top to bottom, increased channel stickiness, and highlighted long-term development momentum and confidence. The sales strategy has been very effective, and domestic sales revenue has picked up significantly.1) Proactively adjust the management structure and make efforts in regional retail centers.Gujia Home Furnishing Co., Ltd. has entered the regional retail center since the second half of 2018. It has integrated the sales of various product divisions into the regional market retail center for comprehensive operation. The sales structure has moved forward to use the product and marketing strategies to be closer to the local market.With the integration of regional retail centers in place, after excluding the impact of consolidation, we expect the company’s endogenous revenue to return to positive growth in the first three quarters of 2019, of which 19Q3 single-quarter domestic sales revenue increased by more than 10%, a significant recovery, fabric sofas, bed productsGrowth drivers.2) The Huishang series enriches the product ladder matrix, and deeply cultivates the third and fourth tier markets.The company launched the Huishang series, which is mainly cost-effective from mid-2019, to fully tap the market potential and achieve effective terminal sales strategies.Today’s public data from the furniture and business staff shows that the company’s “Double Eleven” omni-channel sales revenue reached 7.5.1 billion.We expect that with the mature operation of regional retail centers and the adjustment of the product matrix, the growth rate of domestic sales will try to maintain rapid growth. Establish overseas production bases to hedge risks and improve global market competitiveness.The company announced plans to invest in December 20194.500 million US dollars to build a Vietnamese base with an annual output of 450,000 standard sets of software furniture products, the total output value of the project is 1.9 billion US dollars.Under the background of Sino-US trade tariff levy, the company’s export business has been affected to a certain extent. The Vietnam base is the first overseas base of Gujia Household. It will effectively expand the company’s production capacity, rapidly increase its supply chain capabilities, help companies spread risk, and deal with foreign trade under the background of tariffs.The trend of shifting orders to overseas production capacity will increase market share and consolidate industry segmentation. Investment suggestion: excellent corporate governance, steady development of multiple categories of internal business, vertical leadership of industry leaders, and expected to continue to increase market share.We estimate that the company’s sales revenue for 2019-2021 will be 110,127,14.4 billion yuan, an annual increase of 20%, 15.2%, 13.5%, achieving net profit attributable to the parent company12.1, 13.8.15.7 ppm, an increase of 22 in ten years.7%, 13.3%, 13.9%, corresponding to an EPS of 2.02, 2.29, 2.6 yuan, maintain “Buy” rating. Risk reminder: The risk of real estate boom is reduced, and the increased competition leads to the risk that the industry’s average profit rate will decline.