Three Trees (603737): The amount of engineering work and the rising paint faucet for home improvement

Three Trees (603737): The amount of engineering work and the rising paint faucet for home improvement

Recommended logic: The company is a leading national coatings company. The company grasps the trend of real estate centralization, improves the inflection point and the tide of old reforms at the end of completion. Through capacity expansion, cost-effective products, and high-quality services, it is advancing rapidly in the field of engineering wall paint business., 2019H1 engineering wall paint growth rate is 65.

2%, driving the company to grow rapidly; at the retail end, the company’s business foundation is solid and steady, with distinctive environmental protection and healthy product features, continuous publicity and promotion, increasingly dense offline outlets, and intimate “live now” services,The retail side is expected to grow at a compound rate of 20% in the future, and its market share will steadily increase from the current 2%.

The coatings industry is still in a golden development period.

The scale of the architectural coatings market is more than 100 billion yuan. At present, the industry is at the inflection point of completion, the trend of housing enterprises centralization, the wave of old reforms, and the large-base stock houses have gradually entered the favorable environment of the repainting era. The entire industry continues to be in a golden development period.

1) Turning point at the end of completion: due to tight credit and difficult financing, the scissors gap between newly started and completed construction has continued to expand since 2016, and has continued for more than 3 years, but the law of completion following changes in new construction will not change.The monthly completion rate is 2.

8%, from negative to positive. It is expected that the inflection point will continue to improve in the fourth quarter of 2019, and it is expected to continue for 3 years.

2) The wave of old reforms: The old reforms and reforms have started since 3 years. There are nearly 160,000 old communities in the country with a construction area of about 4 billion square meters.

The projected external wall area is about 3 billion square meters, and the amount of paint used is about 120 inches, corresponding to the release of more than 10 billion market space.

3) Large-base stock houses have entered the era of renovation: In 2018, the number of domestic stock houses has exceeded 27 billion square meters, which is 13 times the newly started area and 30 times the completed area in that year. More 四川耍耍网 second-hand housing transactions are increasing, and the refurbishment of stock housesThe refurbishment market base will be in a rapid expansion phase for a long time.

4) Centralization of real estate: In 2018, the market share of TOP30 housing enterprises reached 45.

2%, the centralization of the real estate industry has also continued to promote the centralization of downstream industries.

Expansion of production + cost-effective products + optimization services, the company’s engineering coatings are surging.

The company seized the industry’s potential to continue its expansion, and its production capacity has been increased from 6 in 2013.

The growth rate increased to 73 in 2018.

5 nominal.

Supported by production capacity, the company focuses on R & D + product testing, good quality control, and a variety of high-performance engineering exterior wall product systems and high decoration and environmental protection products with high cost-effectiveness, and its acceptance in the engineering market has gradually increased. The preferred rate is 19%, only20% after Nippon.

At the same time, because the coating effect requires construction coordination, the company integrates products and construction integration. By analyzing demand-customizing cost-effective products-formulating standardized service processes-the needs of developers based on the region and level of service size scale, customer satisfaction is high.

Revenue for the first half of 2019 was 10.

4 trillion, a growth rate of 65.

2%, continued acceleration, driving the company’s overall size to grow rapidly, and for a longer period of time to better implement high-quality services and increase brand promotion, forming a virtuous circle of strong and strong.

The encrypted coverage of outlets + prominent product features + continuous advertising and publicity + high-quality “live now” services have steadily improved the retail market.

The company adopted the strategy of surrounding the city by the countryside and gradually penetrated into the first- and second-tier cities. Currently, there are more than 15,000 offline sales outlets. Except Beijing and Shanghai, the number of stores in each city is ahead of the number of Nippon stores.

At the same time, the company’s products highlight the characteristics of “green, healthy, environmentally friendly”, net taste, and formaldehyde.

And through continuous advertising and high-quality “live immediately” services to continue to strengthen consumer influence, home improvement wall paint business achieved a steady market share increase.

Earnings forecasts and investment advice.

It is expected that the company’s net profit attributable to mothers will grow at a compound growth rate of 46% in 2019-2021.


Considering the company’s increasing competitiveness and high growth rate, it can enjoy a certain estimated premium, giving the company 27 times PE in 2020, corresponding to a target price of 77.

5 yuan, the first coverage given a “buy” rating.