Liangxin Electric (002706) First Coverage Report: Establishing a Low-voltage Excellent Brand Based on the Mid-to-High-end Market

Liangxin Electric (002706) First Coverage Report: Establishing a Low-voltage Excellent Brand Based on the Mid-to-High-end Market
Investment Highlights: 11. Coverage for the first time.The company focuses on the mid-to-high-end field of low-voltage electrical appliances. It is expected that the EPS for 2019-2021 will be 0.36, 0.44, 0.52 yuan, with reference to the industry average estimated level of 25 times PE in 2019, considering the company’s smart home appliance business growth space to give a certain premium, given 2019 27 times PE, the target price of 9.72 yuan, the first coverage, increase 夜来香体验网 the level of holdings.  12 Focused on the field of low-voltage electrical appliances for 20 years, the performance continued to be stable and upward.The company is deeply cultivating mid-to-high-end markets in the field of low-voltage electrical appliances. Its subdivided products include terminal appliances, switching appliances, etc., and downstream applications include real estate, industrial control, information communications, new energy, and public facilities markets.Since the listing, the company’s performance has continued to rise steadily, with revenue reaching 15 in the first three quarters of 2019.500,000 yuan, an increase of 22 in ten years.75%; realize net profit attributable to mother 2.53 ppm, an increase of 15 in ten years.14%.  13 The real estate market has benefited from increased industry concentration and 合肥夜网 increasing share of existing customers.The company’s downstream applications are dominated by the real estate market, which is expected to account for more than 50%.We believe that the company will benefit from several major trends in the real estate market in the future: 1) the concentration of the real estate industry has increased. At present, the company has integrated into the corporate supply chain of the top ten housing companies in the country; 2) the existing customers of the company in VankeChina already has a share, but there is still room for improvement in other housing companies such as China Shipping, Country Garden, etc. 3) The shift from real estate developers’ delivery of rough houses to hardcover homes will also further drive the demand for low-voltage electrical products.  14. Acquired Liangxin Smart Electric and entered the smart electric and smart home business.After the company acquired Liangxin Smart Electric in 2017, the company adopted smart electric low voltage electrical appliances as its future development direction.As a 100 billion-level market, smart home is still a blue ocean, and the company’s entry into the smart home industry can form complementary advantages with existing businesses, synergize efficiency, and cultivate new profit growth points for the company.  15 Risk Warning: Real estate investment is lower than expected, increasing competition in the industry affects gross profit margin