Dongyi Risheng (002713) Annual Report 2018 and 2019 First Quarterly Comment: Post-investment business shines and performance increases, order growth is expected to continue to pick up

This report reads: 2018 results are in line with expectations, post-investment 杭州桑拿 business contributions have made breakthroughs, and Sumei’s business has increased losses.

The number of stores continued to increase, and the increase in customer acquisition per unit / increase in unit price helped the order to climb.

Benefiting from real estate recovery, both customer acquisition and delivery capacity rose.

Maintain overweight.

Investment Highlights: Maintain overweight.

2018 revenue 42.

0 billion (+16%) / net profit 2.

53 billion (+ 16%) revenue in the first quarter of 20198.

0 billion (+11%) / net profit -0.

800 million (-28%), in line with expectations.

Maintain 2019/20 EPS1.

21/1.

45 yuan (26% / 20% growth rate), forecast EPS 1 in 2021.

72 yuan (+ 18%), the increase in the number of stores / the increase in customer value, benefiting from the recovery of real estate, 杭州桑拿 giving 20 times PE in 2019, maintaining a target price of 24.

2 yuan, overweight.

Post-investment business is dazzling, and Sumei expects to increase.

1) 2018 net profit increased by 0.

3.5 billion, the net profit of the collection Ai / Chuangyu increased by 0.

34/0.

0.6 billion, Xinyi Oriental consolidated (net profit 0.

3.9 billion), etc., the land is going down to home improvement and restructuring / some customers’ capital chain is tight and the negotiation time is prolonged.

9 billion) is a drag.

2) 2018Q4 / 2019Q1 revenue 12.

6 billion (+3%) / 8.

0 billion (+ 11%), net profit 1.

7.7 billion (1%) / net profit -0.

8 billion (-28%), Q1 extension is caused by the replacement of home improvement.

3) Gross profit margin in 2018 was 37.

2% (+0.

3pct), net interest rate 7.

3% (-0.

2pct).

4) Operating cash flow in 2018 2.

0 billion (-64%) was due to an increase in payment of materials / labor payments.

The number of stores continued to increase, and the increase in customer acquisition per unit / increase in unit price helped the order to climb.
1) By the end of 2018, there were 163 A6 business direct-operated stores (13 new additions), and it is expected that more than 10 will be added in 2019; 48 Sumi direct-operated stores (27 new additions), and the store continues to expand.

2) New chronic single 42 in 2018.

6 billion (+ 5%), 37 for home improvement.700 million (+ 4%), 11 new signings in Q1 2019.

At 500 million (+ 9%), the growth rate of home improvement orders (4%) returned to positive, with 39 orders in hand at the end of 2019Q1.

100 million (+ 3%) potential.

3) The transformation of service providers to direct-operated / newly-opened stores has gradually matured, helping US single-stores gain customers, and consumption upgrades have increased customer single-value, and orders have continued to grow.

Benefiting from real estate recovery, both customer acquisition and delivery capacity rose.
1) On February 3, 2019, the sales area of commercial housing in first-tier cities increased by 45% / 62%, Beijing’s sales area of commercial housing increased by 309% in March, and the transaction area of second-hand housing also increased by 42%. Home improvement is expected to benefit.

2) The delivery ability is becoming more and more perfect.

The DIM + system realizes what you see is what you get; deconstructs the construction process to reduce the dependence on the foreman; self-built intelligent warehouse logistics system, the factory on-time delivery rate exceeds 99%.

3) The company started customer diversion in Chengdu in June 2018.

Risk Warning: Sumei Business Develops Less Than Expected