Diou Home (002798): Improved cash flow and focus on incremental progress of new customers

Diou Home (002798): Improved cash flow and focus on incremental progress of new customers

Event: The company released its 2019 Interim Report.

Achieved operating income of 24.

980,000 yuan, an increase of 30 over the same period last year.

13%; net profit attributable to the parent company is 2.

3.3 billion, an increase of 48 over the same period last year.

18%; net profit after deduction to mother 2.

05 ppm, an increase of 33 in ten years.

33%.

Oshenuo’s revenue increased by 37%, sanitary ware business increased slightly: building ceramics business: Oshenuo’s revenue increased by 37.

44%, mainly benefiting from the rapid growth of the real estate engineering business, we expect the engineering end business revenue growth rate to be 45-50% growth range.

On a quarterly basis, Ossino’s Q1-Q2 achieved revenue of 9 respectively.

45 yuan, 12.

99 ppm, a year-on-year increase of 47% and 31%, Q2 growth rate has dropped slightly from the previous month, but still maintained a rapid growth rate on the basis of the higher level of the previous year.

Through the advantages of the parent company’s listing platform, the company strengthened the concentration of large customers benefiting from land acquisition. Existing large customers such as Country Garden, Vanke, Evergrande and other fast-growing business volume, and expanded the company to develop Rongsheng, R & F, and Xuhui.Incremental customers such as China Resources Land have begun to contribute to revenue growth; meanwhile, the distribution side has maintained steady channel sinking and expansion, the number of dealers and stores has maintained rapid growth, and distribution revenue has also maintained steady growth.

The overall gross profit margin increased, and the sales expense ratio increased significantly: the company achieved a higher gross profit margin in the first half of 2019 than the previous year.

15 units, mainly from the increase in gross profit margin of bathroom products.

Ceramic wall tile business gross profit margin 35.

45%, basically the same.

In terms of period expenses, the overall period expense rate is 24.

97%, an increase of 1.
.

The 31 averages are mainly due to the increase in sales expense ratio.

The selling expense ratio is 16.

8%, an increase of 1.
.

Most of the seven are mainly due to the increase in logistics costs and engineering services brought by the rapid growth of the construction business of Eurosnow (the first half of the year, logistics costs increased by 51%, basically matching the growth rate of engineering direct sales revenue; engineering service fees exceeded the growth)72%, which is expected to be caused by the development of new real estate customers); the management expense rate (including the caliber of R & D expenses) has decreased, of which the R & D expense rate has increased, and the R & D expenses increased by 48%; suffered from the long-term increase, financialThe expense ratio has increased.

The operating cash flow improved, and the cash-to-cash ratio improved: In terms of cash flow, net operating cash flow inflows were effectively realized.

33 ppm, an improvement over the same period last year. Quarterly, Q2 net cash flow from operations decreased by zero.

US $ 4.8 billion, a year-on-year net inflow1.

2.5 billion.

From the perspective of the denominated subsidiary, the operating net cash flow of the parent company was 50.33 million yuan, an improvement from the same period of the previous year; the subsidiary (based mainly by Ossino) realized an operating net cash flow of 82.93 million yuan, which was slightly higher than the same period of the previous year.improve.

From the perspective of the cash-to-cash ratio, the cash-to-cash ratio of the subsidiaries was 105%, an increase of 6 percentages over the same period in 2018H, and sales repayments improved; the cash-to-cash ratio of the subsidiaries was 117%, a 10-percent increase over 2018H.

Investment suggestion: In the long run, the ceramic tile market scale exceeds 400 billion yuan, B-side centralized mining accelerates the trend of brand concentration, Osheno solves the problem of grasping the trend of real estate-side engineering business volume expansion, and Guangxi production base is put into operation in the first half of the year to bring capacity guarantee and retailThe rapid expansion of the distribution of end-sellers and stores, the financing advantages of listed companies, the expansion of production capacity and the 杭州夜网论坛 expansion of customers have driven rapid growth.

We expect the company’s EPS for 2019-2021 to be 1.

4 yuan, 1.

85 yuan, 2.

49 yuan, corresponding to PE 12, 15, 9 times, maintaining the “buy” level.

Risk warning: demand is growing severely, customer expansion is less than expected, and raw material price fluctuation risks.