Kitchen electric VS custom home, valuation repair market is gradually approaching

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From According to the financial data released by various companies and the feedback from research institutions this year, the downturn in the real estate cycle and the implementation of the fine decoration policy have hindered the development of the kitchen appliance and custom home industry, but in the long run, these two tracks still have In the long-term development space, this article will explain the development prospects of these two subdivisions from the perspective of the securities market.

Recently, a number of banks have successively lowered their mortgage interest rates. The pressure on the domestic economy has gradually increased, and the market’s expectation of real estate relaxation has warmed up. In the short-term, as a kitchen appliance and custom home sector with a high degree of relevance to the real estate cycle, the real estate policy amendment will also open the valuation of the sector. In the long run, both kitchen appliances and custom homes have a lot of room for development. At present, the growth of kitchen appliances is more certain.

Unstoppable real estate cycle

Kitchen appliances and custom homes, because sales and installation mostly occur in the housing renovation stage, building materials properties are much larger than ordinary home appliances and household goods properties.

Overall, the negative impact of real estate on kitchen appliances and custom homes next year may be this year. According to the statistics of the Bureau of Statistics, the sales area of ​​commercial housing in the first 10 months of this year only increased by 2.2%. Considering that the growth rate in November and October was negative for two consecutive months, and the sales base was higher in November and December last year, it is expected that the sales area for the whole year will increase by zero. With the weakening of marginal demand for shed reform and the squeeze effect of the rising cost of third- and fourth-tier housing purchases on real estate demand in low-tier cities, if there is no overall shift in real estate policy next year, the national commercial housing sales area will be the first for five years. Year-on-year decline, the overall decline is at 10%.

This year, kitchen appliances and custom homes have clearly felt the chill caused by the downturn in real estate. Boss Electric and Vantage’s single-quarter revenue growth rate in the third quarter has dropped from the previous 20%-30% to 10%. Within the range, Sofia and European homes have also dropped from the previous 30%-40% to 10%-20%. From a fundamental point of view, the industry will face a more unfavourable operating environment next year, and EPS will continue to be under pressure.

But EPS pressure does not mean that there is no market. The valuation of kitchen appliances and custom homes depends on the marginal correction of real estate policies. The current low valuation provides investors with a sufficient margin of safety. The dynamic P/E ratio of Boss Electric and Vantage is only 12-13 times, and the dynamic P/E ratio of Sofia and Oupai is only about 20 times. There are concerns about corporate cash flow, profit margins, and profitability.

From a policy perspective, considering the impact of the real estate recession on the macro economy, the real estate development investment is expected to decline by 5% year-on-year (compared with 9.7% year-on-year in the first ten months of this year). Due to the limitations of macro-control tools, the implementation of the property control policy portfolio for more than a year may be improved in the first quarter of next year, and it is expected to become an important driving force for the valuation of the two major sectors.

Thinking about long-term space

Overall, kitchen appliances and custom homes are good competitions, and penetration and category expansion provide long-term space. In terms of custom home, the current domestic penetration rate is only 20%-30%, and there is still room for improvement compared with developed countries. At the same time, customized companies can not only produce wardrobes, cabinets, but also each family is extending to the direction of the whole house customization and assembly.

In terms of kitchen appliances, although the penetration rate is higher than that of custom homes, there is still a good room for growth compared with white goods. In 2017, the sales of range hoods and gas stoves reached 27.27 million units and 28.45 million units respectively. The sales volume of refrigerators and washing machines with one machine and one machine attribute was 44.85 million units and 44.14 million units respectively, which means that the smoke stoves Annual sales may have more than 50% room for improvement.

If the superposition considers the trend of fine decoration and brand barriers, the growth of kitchen appliances will be highly certain. Fine decoration is a certain long-term trend. Compared with overseas, it will be found that the proportion of overseas new home decoration is quite high, and the country is also actively promoting fine decoration. Although there are still many engineering quality problems at present, it is not concealed. On the one hand, it can save the decoration cost for the owners through centralized procurement, and on the other hand, it can save energy for the majority of non-professional owners through professional decoration.

But for kitchen appliances and custom home businesses, they are not happy to see this trend. The reason is that real estate developers have strong bargaining power, which will weaken the profitability of kitchen appliances and custom homes. According to the feedback from the comprehensive enterprise, the comprehensive profit margin of the engineering channel is generally 5-10% lower than the original retail channel, and the payment cycle of the developer in the current credit environment has been extended to 1 year. There have been different degrees of growth, and the quality of earnings has declined.

Relatively speaking, the negative impact of fine decoration on custom homes may be even greater. On the one hand, the brand barriers of custom homes are far less than kitchen appliances. From the perspective of market share, the share of CR4 in kitchen appliances has already reached 60%. It is difficult for consumers to accept products other than mainstream brands, so developers do not have much choice in kitchen suppliers. In contrast, the market share of custom home faucets is still at a fairly low level, and consumers’ brand recognition is weak. Therefore, when negotiating with real estate developers, custom home furnishing companies have lower bargaining power than kitchen appliances, especially Under the background of the pursuit of cost-effective management and control by real estate companies, real estate companies involved in the wardrobe and cabinet business have emerged.

On the other hand, fine decoration is contrary to customization. China’s fine decoration is still in the initial stage of development. At this stage, more ways to solve the standard decoration mode, how to ensure the quality of decoration and product quality, the development of personalized options will inevitably have resistance.

Choice of investment main line

Overall, standing next to the marginal relaxation of real estate next year, kitchen appliances and custom homes are the beneficiaries, and kitchen appliances have a higher risk-to-reward ratio. First of all, from a logical point of view, the custom home sector has always been flawed in the logic of fine decoration, and has not been fully expected by the market, there are certain variables in the future;

Secondly, from chip replacement and company From the perspective of governance, the kitchen appliance company has been on the market for a long time. After several rounds of wind and rain, custom homes were almost intensively listed last year. Currently, the release of the lifting of the ban is widespread, and the management’s operational capabilities have not yet been fully recognized by the market. In addition, from the perspective of valuation, the safety margin of kitchen appliances is even higher, even if there is a further decline in real estate or other unexpected factors, the risk of retracement is small.

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