1. With kitchen utensil and small home-appliance products as its core business, the company has become the bellwether in domestic kitchen & bath, kitchen utensil and home-appliance sectors, and holds stronger competitiveness.
2. Kitchen utensil and small home-appliance products will witness certain growth. China’s kitchen utensil sector has entered into maturity stage and sales volume in the coming years is to remain stable for the rigid demand. Some small home-appliance products have been daily necessities and can resist economic fluctuation. As people’s consumption level improves, sales volume of small home-appliance products is likely to keep 8% growth in the coming years promoted by consumption upgrade and increasing popularizing rate.
3. SEB Holding Company promotes the enterprise’s profitability. Solid technical strength, rich product line and worldwide sales channels of SEB can help enhance comprehensive strength of the company and push it to share the rapidly raised performance from swiftly growing small home-appliance industry. Meanwhile, based on transference of large orders, the export is expected to see over 80% steady growth.
4. Performance enjoys certain accretion and small home-appliance business increases rapidly. Kitchen utensil sector is expected to keep a ~5% steady growth; small home-appliance income accounting for 51% of total operating revenue in 1H2008 jumps 71% yoy and continues high-growth trend, which is hopeful to maintain a ~40% increase and become important profit resource.
5. “Overweight” rating maintained. We predict 2008-2010E EPS to be Rmb0.54, Rmb0.64 and Rmb0.81, representing P/E ratio of 26x, 22x and 17x. In view of high growth of the company, we keep “Overweight” rating for the counter.