Mona Lisa was affected by the real estate downturn, with declining revenue, facing the risk of account recovery, and needed to find a new growth path.
The real estate industry is still in a downward period, and the closely related building ceramics industry is not very optimistic. According to the relevant data released by the China Building and Sanitary Ceramics Association, the national output of ceramic tiles in 2023 will be 6.73 billion square meters, a decrease of 8.0% from 2022, continuing the downward trend.
Tile giant Mona Lisa Group (002918. SZ, hereinafter referred to as "Mona Lisa") is also under pressure. Its recently released 2023 annual report shows that it recorded revenue of 5.921 billion yuan during the year, a year-on-year decrease of 4.94%. However, due to the improvement of turnover efficiency, the reduction of sluggish inventory, the implementation of various fee reduction and cost reduction, quality and efficiency improvement measures, etc., on the basis of a loss of 380 million yuan in 2022, Mona Lisa's net profit attributable to the parent company rose by 169.93%, and the net profit attributable to the parent company in 2023 was 266 million yuan.
Despite the turnaround, the impact of the real estate downturn continues to exist and cannot be ignored. Mona Lisa said in the annual report "Possible Risks" that in recent years, affected by the downturn in the real estate industry, some real estate companies have problems with capital liquidity, the phenomenon of public debt default continues to increase, the risk of overdue default has expanded, and there is a risk of accounts receivable recovery.
During the period of rapid real estate development, Mona Lisa has achieved double-digit growth for many years by relying on architectural ceramics, and now it is also suffering from the cascading effect of "one loss and two losses". How to find a new development path to resist the adverse effects of the thunderstorm of real estate enterprises is a problem that Mona Lisa needs to solve urgently.
The revenue is more than 1 billion less than the peak since listing
With the prices of energy and some raw materials continuing to run at a high level, the Mona Lisa should breathe a sigh of relief to turn losses into profits in 2023. As a result of measures such as "increasing the proportion of distribution business with fast cash turnover, reducing credit for real estate projects, and collecting project payments", Mona Lisa's revenue decline was smaller than that of the previous year, and the net profit attributable to the parent company increased by nearly 170%.
In 2022, on the basis of a year-on-year decrease of 44.42% in 2021, Mona Lisa's net profit attributable to the parent company fell by 220.93%, recording the first loss since listing, with a loss of 380 million yuan.
However, although it struggled to shore from the first loss in 2022, the net profit level of Mona Lisa's net profit attributable to the parent is still lower than in 2021, and there is a big gap with 2020, less than half of 2020. The revenue is more than 1 billion yuan less than the peak since listing, which is 6.987 billion yuan in 2021.
After its listing in 2017, Mona Lisa's net profit has maintained double-digit growth for several consecutive years, especially in the early stage of the epidemic, with revenue breaking out against the trend, increasing by 30.89% in 2020, recording a net profit attributable to the parent of 566 million yuan. The year-on-year growth rate of revenue is also double-digit, with a 43.64% increase in 2021, and the revenue of that year will reach 6.987 billion yuan.
However, the building ceramics industry is highly related to real estate, even if it has been ranked as a first-line brand for many years, it is not easy to deal with the impact of the deep adjustment of real estate. In 2021, the thunderstorm of real estate companies began to appear, and Mona Lisa experienced the first decline in net profit attributable to the parent company since its listing that year, and in 2022, there will be the first "double decline" in revenue and net profit attributable to the parent company.
Mona Lisa also needs to further digest the adverse effects of the explosion of real estate companies. The annual report disclosed that in 2023, 39.98 million yuan of new investment real estate will be added, which will be the delivery and transfer of real estate used by the real estate business to pay off debts. As of April 15, 2024, it has signed a mortgage agreement with real estate companies for an amount of about 1.227 billion yuan, and the disposal and realization of these real estate assets is also a test for Mona Lisa.
The former financier was also sued by the Mona Lisa. From August 2023 to January 29 this year, Mona Lisa has successively filed lawsuits against Jinke Real Estate, Xianyang Sunac Jardine Real Estate Co., Ltd., Helenbergh Real Estate, etc., of which the amount involved with Jinke Real Estate alone is as high as nearly 80 million yuan. From 2022 to early 2023, it also filed lawsuits against a number of real estate companies such as Yango City, Aoyuan Group, Tianjin Lichuang, and Qidong Guangxun Real Estate Development Co., Ltd. But with the current cash flow situation of real estate companies, even if the Mona Lisa lawsuit is successful, what is the hope of recovering the arrears?
It is still difficult to pick up the girder of the rock slab
Mona Lisa's products involve porcelain tiles, ceramic tiles, porcelain plates and other categories, and their contribution to revenue is more than 98% all year round, and it will be 99.31% in 2023. In terms of products, in 2023, porcelain glazed tiles will sell 4.524 billion yuan, accounting for 76.40% of total revenue, and ceramic plates and thin ceramic tiles will sell 688 million yuan, accounting for 11.62% of total revenue.
In recent years, the proportion of enamel tiles in Mona Lisa's revenue has increased year by year, from 43.59% in 2017 to 76.40% in 2023.
As the leading architectural ceramics brand in China, Mona Lisa has also led the development trend of the industry, such as the "snowflake white" tile launched in 2002, which triggered a competition in the industry to imitate after being listed. According to public information, this product is the first to be created by Mona Lisa, with a whiteness of more than 80 degrees, which is 20 degrees higher than the whiteness of ordinary polished tiles, with a good decorative effect, and has become a representative work of ultra-white bricks.
Xuehuabai came out Source: Mona Lisa's official WeChat public account
In addition to ceramic tiles, Mona Lisa has developed large-size ceramic slabs, ceramic sheets, rock slabs and other large-size products, including large-size ceramic sheets in 2007, 2.4-meter ceramic slabs in 2016, and large-size ceramic rock slabs in 2019.
In addition to walls and floors, large-size products can also be used as refrigerator panels, cabinets, dining tables, living room TV cabinets, coffee tables, etc., with a wider range of application scenarios. In particular, rock slabs, due to their high temperature resistance, light and thin, easy to clean, can be used in home countertops, furniture finishes, electrical panels and other fields, so that building ceramic products from the field of architectural decoration to the field of kitchen plates, home customization, home high-end field.
Mona Lisa slate Source: Mona Lisa official website
In recent years, Mona Lisa has invested a lot in R&D in the field of rock slabs. From 2020 to 2023, its R&D expenses will be 186 million yuan, 265 million yuan, 235 million yuan, and 214 million yuan respectively, of which most of the R&D projects are related to rock slabs and large slab products, such as rock slab back net composite technology, high-whiteness green body ceramic rock slabs, digitally stacked wax ceramic rock slabs, low-expansion heat-resistant dining table ceramic rock slabs, etc.
Mona Lisa said that in 2024, the production capacity of the building ceramics industry is expected to be maintained between 60-6.5 billion square meters, the market is still in excess of supply, competition will continue to intensify, large-scale, high-performance ceramic slabs will become the fastest growing category in the industry, continue to expand and extend from the field of building ceramics to the field of large home furnishings.
However, at present, the rock slab has not brought much help to the revenue. In 2023, the revenue of Mona Lisa ceramic plates and thin ceramic tile products will be 688 million yuan, a year-on-year decrease of 6.78%. Since 2020, the proportion of this type of product in total revenue has shown a downward trend, with 13.53% in 2020 and 11.62% in 2023.
Mona Lisa intends to promote the orderly development of the large slate slab industry, realize the rock slab from technology research and development to industrialization, and open up a new blue ocean market for architectural ceramics, but at present, it seems that the rock slab is still some time away from popularizing the public. On the other hand, this field has gradually become a trend of competition, Dongpeng Holdings, Delifeng, New Pearl and other brands have made efforts in the field of rock slabs.
With the downward trend of real estate, it is no longer so easy for building ceramics enterprises to make money. Since 2019, Mona Lisa has begun to lay out the strategy of "large tiles, large building materials, and large home furnishings", increased efforts to expand offline distribution, and tried emerging channels such as e-commerce and live broadcasting. In the past five years, the revenue of distribution channels has continued to maintain positive growth, accounting for more than 6% of total revenue, but its gross profit margin has always been inferior to that of strategic engineering channels in cooperation with real estate companies.
In addition, as the price war in the ceramic tile industry continues to escalate, the single main business may bring certain resistance to the future development of Mona Lisa. Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, said that enterprises that rely on real estate development such as Mona Lisa tiles need to consider diversification and transformation strategies, such as exploring interior design, home decoration and other diversified operations related to their main business, exploring non-real estate markets, strengthening online sales channels, and using digital tools to improve operational efficiency and market responsiveness.
For the new performance growth point in the future, whether to consider opening up new areas outside of ceramic tiles, "Consumer Reports" sent an interview letter to Mona Lisa, but did not receive a reply as of press time.