Paper and printing industry: the market mood is low, the left layout is at the right time, DCF model

2018-11-03

　Affected by many factors such as the real estate cycle downward, the recent market performance of customized furniture enterprises is not as good as expected. However, we believe that the overall market decline period is also a period of industry structure remodeling, leading enterprises market share does not decline but increase. The current low point of market sentiment is also the low point of valuation of leading enterprises in the custom furniture industry. Through DCF model cash flow discount, we explore the intrinsic value of enterprises and test to what extent the market reflects pessimistic expectations.

Home furnishing industry as a post-partum cycle industry, the real estate market downward valuation of the industry has formed a disturbance. In the past few years, the real estate market has been active, stimulated by favorable policies and favorable market conditions, such as the monetization of shantytown reform. With the trend of consumption upgrading in the home furnishing industry, the market scale of customized furniture with certain post-partum cycle attributes has achieved rapid growth. This year, due to the impact of real estate downturn, competitive landscape change, channel reform and other changes, the market's recognition of customized furniture enterprises has declined. One of the most direct manifestations is the decline in valuation, one of the leading enterprises Sophia's valuation range from 35 to 48 times directly dropped to about 15 times.
Although real estate sales have a huge impact on the valuation of custom furniture enterprises, the impact of real estate sales on the company's sales revenue and net profit is weaker than market expectations. We believe that any industry growth slowdown, will further highlight the strength of leading enterprises, accelerate the concentration of market share. In the first three quarters of 2018, the estimated net profit attributable to the parent of Shangpin house distribution increased by 38.24%-45.04%; Sophia expects the net profit attributable to the parent growth rate of 20%~40%. The sales revenue and net profit of the leading enterprises to go against the trend of growth shows that the market pattern of custom furniture is changing, the real estate cycle downward pressure capacity of small and micro enterprises have a greater impact, but the leading enterprises can take this opportunity to seize market share, change


share