Macalline (601828): Two-wheel drive for leading brands and operational capabilities in the home retail channel

Macalline (601828): Two-wheel drive for leading brands and operational capabilities in the home retail channel
Macalline’s leading home actually landed on A shares, forming a Ssangyong competition pattern.The Red Star Macalline Air Force was listed on the Hong Kong Stock Exchange 无锡夜网 in 2016, and officially entered the A-share market in 2018.On October 17, the restructuring of Wuhan Zhongshang was approved by the Securities Regulatory Commission, and the house will actually use Wuhan Zhongshang to land in a stock market and become another listed home retail giant after Red Star Macalline.The current market forms a double-headed structure. Macalline’s revenue continues to accelerate.Red Star Macalline’s three-year revenue has gradually doubled since it was listed in June 2016 (6.11%, 14.54%, 30.17%), but the revenue overrun ratio of new retail in the past two years has been slightly lower, and has remained stable at about 13%. Macalline’s gross profit margin remains relatively high, with diverse sources of income.In 2018, the gross profit margin of Red Star Macalline (65%) was significantly higher than the gross profit margin of new retail (45%).Mainly stems from two points: 1) Red Star Macalline has performed more prominently in its main business “leasing management”.Red Star Macalline has effectively controlled property costs while ensuring high merchant rents and property management fees due to its core areas in various towns around its own stores and its own long-term management experience.2) Red Star Macalline ‘s other major business “commissioned” has a higher gross profit, with a gross profit margin of 60.36%.  The gross profit margin of some projects even reached 90%, which was mainly due to the labor cost of its commissioned business, and other costs decreased. Double taps cut the national furniture market, and Macalline has a slight advantage.Macalline has maintained the number of stores in the past three years.  In 2018, Red Star Macalline (308 stores) had the largest number of new retail stores (285 stores). Macalline’s management model has more control and more balance between various sources of income: 1) It is also an asset-light expansion. Red Star Macalon’s management model has more operating control over its shopping malls.Therefore, it is more convenient to standardize process management, cost control, provide high-quality services, enhance brand awareness, and help build a good consumer reputation.2) Red Star Macalline’s operating income channels are more balanced.Leasing management accounts for about 50% of total revenue, 29% for commissioned business, 10% for construction and design services, and 3% for merchandise sales. Profit forecast and rating: Considering the company’s strong brand power, management and operation capabilities, high bargaining power for fully competitive home B-end customers, and continuous and rapid expansion of store revenue, it is expected to achieve revenue 168 in 2019-2021.14/198.62/231.320,000 yuan, net profit attributable to mother 49.64/55.26/60.17 trillion, eps are 1.40/1.56/1.69 yuan, corresponding to the price-earnings ratio of 7 on October 29, 2019.9/7.1/6.5 times, the first coverage given a “prudent overweight” rating.Risk Warning: Store Expansion Is Less Than Expected

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