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Yuyuan Co., Ltd. (600655): Happy fashion ready for the old and rejuvenated

05/21/2020

Yuyuan Co., Ltd. (600655): Happy fashion ready for the old and rejuvenated
The 18-year reorganization of assets and the adjustment of the main business brought a new life to the century-old jewellery brand.The company is one of the “Old Eight Shares” of the popularity of the Shanghai Index. Before the asset reorganization in 17 years, the company focused on comprehensive business such as gold jewelry, catering, medicine, department stores, and so on.After a major asset reorganization in July 18, he joined the integrated real estate business.After adjusting the financial data of the company for 18 years, it achieved revenue of 337.800 million / + 7.2%, net profit attributable to mother 30.20 billion / +武汉夜网论坛 4.7%.We believe that since the company’s 18 years are more years of adjustment and transformation of its business structure and jewellery and fashion business, the adjusted growth performance is relatively relative, but in 2019-22, it will be driven by the jewellery and catering business + distribution incentive binding + real estate business performance commitmentDriven, CAGR in the next three years is expected to increase to 13.At 5%, the hub has moved up, and Fosun Group’s continued support in terms of capital and resources will not be ruled out, and its growth is expected to rejuvenate. Jewellery and fashion business exhibition in 19 years is expected to accelerate + steady development of catering and tourism business + fashion landmark 3 years performance commitment to help the overall performance of steady growth: ① Jewellery accelerates the exhibition store + diamond industry chain layout, the main trend of the development of jewelry fashionGood: The company is one of the domestic leaders in the field of gold jewellery. At the end of 18, the number of jewellery and fashion chain outlets reached 2090 (the third largest in the industry in terms of store scale), of which 181 were direct-operated chains and 1,909 franchised stores.In terms of business strategy, Lao Miao mainly focuses on increasing consumer demand in Tier 1 and Tier 2 cities, while Yayi focuses on reducing consumer demand in Tier 4 and Tier 2 brands to meet the diverse consumer demand.After 18 years of management and store adjustments, and 1.Acquired 80% equity of International Gemological Institute IGI for US $ 0.9 billion. It is expected that 200 stores will be opened in 1919, which will accelerate the growth and continue to upgrade and optimize the high-end diamond industry chain.② Regeneration injection of fashion landmarks, boosting both cash flow and performance, synergistic development of comprehensive city development is expected: The company’s reorganization and injection of assets in July 18 for the “Hive City” composite function real estate business continuously built by Fosun Group, including 24The company and in 2018-2020 promised to achieve a net profit increase of not less than 7 billion (the land has been achieved during the 18 years 22).2 trillion results; the company’s net operating cash flow before the 17-year restructuring was only 11.1 ppm, 75 after 18 years of reorganization.800 million).In the future, “Hive City” is expected to join hands with Yuyuan to expand urban integrated real estate development, gradually realize land conversion, and continue to provide good cash flow and performance support in the future.③ The cultural and commercial sector has developed steadily, and the catering and resort business has developed steadily: The company’s catering business includes many established brands and newly acquired Suzhou Songhe Tower, and achieved catering revenue in 18 years6.600 million, currently has 15 directly operated stores, 1 joint venture store, 3 franchise stores, and continues to expand in Suzhou, Shanghai, Beijing, Wuxi.The main business of the company’s tourism business is Japan’s Hoshino Resort Resort. Under the continuous collaborative development of Club Med, a subsidiary of Fosun Group, the 18-year performance turned positive for the first time, and the resort business gross profit7.50,000 yuan (occupies 8).12%), the next 2 to 3 years of continuous climbing we expect to still have 50% growth potential. Fosun Group’s second increase in shareholding in July 18 achieved absolute control, and the support of major shareholders ushered in a substantial advance.Fosun Group initially transferred 20% of the equity of Yuyuan Tourism and Yuyuan Co., Ltd. in 2002, and began to initially control the listed company.By July 18, the company had completed a major reorganization, and the company issued shares to 16 objects including Zhejiang Fosun, a subsidiary of Fosun, to purchase all and part of its equity in 24 companies including Shanghai Xinghong.After the second increase in holdings, Fosun Group’s shareholding in Yuyuan significantly increased to 68.52%, achieved absolute control of Yuyuan, becoming the flagship asset of the group’s “Happy Ecology”.In view of the Group’s continued optimism for the development of the “happy + fashion” industry, we believe that the company’s gold jewellery, urban cultural landmarks and other strengths have achieved the Group’s continued support in terms of funds and resources to achieve synergy. The three equity incentives constrain core executives, and the exercise conditions constrain the company’s performance to grow at a compound growth rate of not less than 12% in 2018-22 to achieve a win-win situation: ① After the absolute control of Fosun Group in July 18, large-scaleThe management team implemented a market-based salary increase, including the implementation of stock issuance (4.5 million shares) and 45 first-phase partners in the implementation of restricted stock incentives (458 million shares) for four senior executives within Mr. Mei Hongjian, President of Yuyuan Co., Ltd. in November 18Ten thousand shares); ② After the injection of composite real estate business, the company implemented the second phase of the stock incentive plan (5.4 million shares) for six senior executives of the real estate business in March 19th.The first and second phases of the company’s stock budget exercise conditions until the end of February 2018, the compound growth rate of the company’s performance is not less than 12% (the evaluation of the three exercise periods), which is expected to achieve a good tie for the company’s stable growth in the next three yearsset. Investment suggestion: After 18 years of integration and adjustment, the company will be driven by the jewellery and catering business drive + equity incentive constraint + real estate business gambling drive in the next 3 years to promote upward movement.We estimate that the company’s net profit attributable to its parent in 2019-2021 will be 34.500 million, 39.500 million, 44.800 million, corresponding to a growth rate of +14.3% / + 14.3% / + 13.6%.We make a segmental estimation of the company. The real estate business refers to the average PE level of comparable companies in the real estate industry (corresponding to November 2019.8 times PE), and high certainty of performance commitment, giving 13 times PE, corresponding to a market value of US $ 30.5 billion; the company’s jewelry fashion or other business reference industries are comparable to the company’s average PE (corresponding to 19 years 18).5 times PE), considering the company’s future store opening speed, product structure transformation to jewelry fashion, and management team optimization, given a certain premium to 20 times PE, corresponding to a market value of 18.1 billion; tourism resort business comparable to the company’s average PE (Corresponds to 2019 25.60 times PE), giving 20 times PE, corresponding to a market value of 10.500 million; the company’s overall target market value is 496.5 trillion, corresponding to the target price of 12.80 yuan, the previous “Buy-A” rating. Risk reminders: The jewelry market is deviating from the boom, gold prices are rising, industry competition is intensifying, the risk of expansion of franchising channels is less than expected, and the consumer spending power is weakening.