event:
1. On July 21st, the company announced that it had signed a "Strategic Cooperation Letter of Intent" with Zhongda Real Estate Group Co., Ltd. (Zhongda Real Estate). The collaboration involved Shenzhen Decoration Art Decoration Design Co., Ltd. (decoration art) and Hangzhou Zhonghao Guoshun Real Estate Co., Ltd. (Zhonghao Guoshun), who will serve as the sole cooperation units for Zhongda Real Estate and Zhonghao Guoshun in real estate on-site home improvement consulting and marketing of home improvement solutions. The partnership aims to provide services such as decoration, curtain wall installation, garden landscaping, intelligent systems, and integrated home solutions.
2. On the same day, the company's subsidiary Yingchuang Building Technology (Shanghai) Co., Ltd. entered into an agreement with CIC Xineng (Beijing) Technology Development Co., Ltd. to create a free 3D-printed "KIP" pavilion at the Expo Milano 2015. Additionally, the company signed a cooperation agreement with MRVARUNSHARMA & ASSOCIATES and established a joint venture to enter the Indian market, marking a significant step in international expansion.
3. The second phase of the company’s employee stock ownership plan was launched, covering employees from its holding companies, subsidiaries, senior executives, middle management, and key personnel. With a maximum of 640 participants and a total capital limit of 1.1 billion yuan, the plan includes a 1:1 capital allocation by Guosen Securities, amounting to 200 million yuan. The company guarantees a minimum return of 15% per year for participants who meet performance targets, and 7.5% for those who do not, reinforcing employee motivation and long-term commitment.
Investment Points:
Collaborating with Zhongda Real Estate is expected to boost the company’s market share in major cities along the Yangtze River, while promoting its “Mushroom+†Internet home improvement strategy. As a key member of Zhejiang Property Group, Zhongda Real Estate has developed numerous high-quality projects across major cities in the region. This partnership not only enhances the company’s presence in the home improvement sector but also accelerates the adoption of its digital transformation initiatives. The cooperation with Zhonghao Guoshun further solidifies the “Mushroom+†brand, which integrates design, furniture, appliances, and technology into a seamless ecosystem, offering one-stop solutions for customers. We are optimistic about the future of this innovative model and its potential for growth through franchise expansion and supply chain development.
The 3D printing project at the Milan Expo is a milestone for the company, showcasing its advanced building technologies and increasing brand visibility. This initiative also serves as a test for the Indian market, where Yingchuang Technology has partnered with MRVARUNSHARMA & ASSOCIATES. With India being a BRICS nation and a key player in the Belt and Road Initiative, there is significant potential for 3D printing applications in housing construction. We believe this move will enhance the company’s global footprint and support its long-term international ambitions.
The second employee stock ownership plan is designed to strengthen internal cohesion and align employee interests with the company’s long-term goals. By involving a broader range of staff, including technical experts in 3D printing and smart buildings, the plan ensures that key talent is motivated and retained. The company’s guarantee of returns reinforces confidence in the business model and reflects a strong belief in future growth.
The company has been recognized as a "National Housing Industrialization Base" by the Ministry of Housing and Urban-Rural Development, highlighting its leadership in residential industrialization and standardization. Looking ahead, the company aims to build a comprehensive residential decoration industry chain, positioning itself as a national leader in R&D, production, and system integration. Its focus on residential industrialization, Internet home improvement, 3D printing, and smart buildings aligns with China’s "Made in China 2025" strategy, reinforcing our confidence in its long-term prospects.
Following the resumption of trading, the stock price adjustment has brought the valuation closer to its intrinsic value. With strong growth performance and the employee stock ownership plan enhancing investor confidence, we maintain a "Buy" rating. Our forecast for 2015-2017 EPS stands at 0.90, 1.05, and 1.21 yuan respectively, with valuations of 26.5x, 22.6x, and 19.5x, reflecting a positive outlook.
Risk Warning: Potential risks include macroeconomic volatility, underperformance in real estate sales, and challenges in implementing the Internet home improvement strategy.
(Editor)
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