China Fund News reporter Nan Shen
On May 15, the 2023 annual general meeting of shareholders of Oppai Home, a leading custom furniture company, was held at the company's headquarters in Guangzhou, and a reporter from China Fund News attended the meeting. At the meeting, in addition to the deliberation of routine proposals, Yao Liangsong, chairman and president of the company, responded to the core issues that investors are concerned about.
Last year, the company's operating income only increased slightly by more than 1%, far less than the expectation of 10%~15%. Yao Liangsong said that it was mainly affected by the downgrade of consumption and the decline in the real estate market, and at the same time, in order to comply with the industry trend of the rapid rise of the whole home furnishing, the company adjusted its operating structure in April and May last year, "There is a process of adaptation, which has also affected sales to a certain extent."
Under the consumption downgrade, what is the company's response? Yao Liangsong said that on the one hand, it will expand the unit value of customers by extending categories; On the other hand, the company itself needs to be more proficient and fluent in the new structure with the city as the center of business, giving consumers more sense of gain, and at the same time reducing costs.
In 2024, Oppai put forward the business goal of "striving to achieve a year-on-year increase of 5%~10% in operating income and a 5% year-on-year increase in net profit". Yao Liangsong admits that there is a lot of pressure to achieve, "but we will do our best."
Three factors led to lower than expected revenue last year
In the 2022 annual report, Oppai Home Furnishing gave the business goal of "in 2023, the company will strive to achieve a year-on-year increase of 10%~15% in operating income and a year-on-year increase of 10%~15% in net profit".
On April 25 this year, the company's 2023 annual report was released, showing that the company's operating income was 22.78 billion yuan, with a year-on-year growth rate of only 1.35%, far from 10%~15%. Due to the decline in the cost of raw materials and the increase in non-recurring profit and loss, the company's net profit growth rate in 2023 will reach 12.9%, recording 3.036 billion yuan.
At the shareholders' meeting, some investors asked whether the company's revenue growth rate last year was lower than the expected target, and whether it was related to the company's business structure reform last year?
Yao Liangsong, chairman of the company, said that last year's revenue was indeed lower than expected, first affected by the downgrade of consumption, the decline in customer unit price, and the decline in the number of consumer decorations. Secondly, the custom home furnishing industry is in the downstream of real estate, which is strongly related to the real estate industry, and last year's lower than expected income was also affected by the decline in the number of new home deliveries.
Finally, under the above two pressures, the industry has become more involuted, the industry ecology has undergone profound changes, and the whole home with decoration has risen rapidly. Previously, Oppai was more proud of having seven or eight thousand single-product stores, such as cabinet stores, wardrobe stores, wooden stores, etc., but now these advantages have been greatly weakened under the new industry ecology.
"Last year, it can be said that the sea has changed, but it is not so easy to change our thousands of stores, involving the system, business model, product and display, team, etc., not that it can be changed and can be completed overnight." Yao Liangsong said.
Yao Liangsong introduced that in April and May last year, Opai Home Flourning has launched organizational changes in a timely manner, and the Oppai brand has changed the single product division and the whole division of wardrobes, cabinets, wooden doors, doors and walls, to divide them into cities and regions, and set up three regional business divisions.
"To be honest, we really couldn't adapt to it at the beginning, including our own team and agents, all of them needed to adapt to the process, and the company's revenue was really affected in this case." Yao Liangsong said frankly, "But I think this reform is necessary and deserved, and the long-term pain is better than the short-term pain, and the body will inevitably be affected after short-term surgery, but if it is not changed, the longer it is delayed, the more troublesome it will be." ”
Two measures to deal with the downgrade of consumption
In the face of consumption downgrade, what should companies do? That's the second big question raised by shareholders.
Yao Liangsong pointed out that there are fewer consumers, consumers' consumption is lower, the involution of the industry has intensified, and there are price wars from time to time, "which is what we must face."
How to deal with it?
Yao Liangsong said that the first is to strive to make the unit value bigger. For example, consumers buy wardrobes, the previous budget of 80,000 yuan, now may be reduced to 70,000 yuan, or even 60,000 yuan, "then we will strive to increase the unit value of each consumer, such as extending the wardrobe to furniture, doors, walls and other categories, and even start from the consumer's decoration needs, and talk with the decoration company, and the decoration company bears part of the drainage costs."
Second, in the new city-centric organizational structure, it is necessary to be more proficient and fluent, and "slowly adapt to this new model". On this basis, "we should provide consumers with more sense of gain through better product design, production and service, while at the same time reducing the error rate and cost."
In the 2023 annual report, the company has set the goal of "challenging to achieve a year-on-year increase of 5%~10% in operating income, and a challenge to achieve a year-on-year increase in net profit of 5%". How difficult will it be to achieve this goal, and will it fail again? This is the third most important issue for investors.
"Since the beginning of the year, I can feel the pressure outside." Yao Liangsong admitted, "You may have also seen the sales data of the real estate market, not a general decline, but a very steep decline." At the same time, there is also the pressure of consumption downgrading, especially for bulk improvement consumption like ours. The so-called 'bulk' means that we will be more cautious, and the so-called 'improvement' means that it is not necessary and can be slowed down, unlike the necessities of oil, salt, sauce and vinegar, so we feel more pressure. ”
First, the company's team has a strong will to fight, including overcoming difficulties, which has always been the corporate culture of Oppai; Second, the base in the second half of last year was lower than that in the first half of the year; Third, the company's control of the large home model is improving quarter by quarter, and some cities are improving significantly month by month; Fourth, the drainage has been effective, including e-commerce investment, joint investment, live broadcast and local e-commerce, and various forms are constantly trying to open up the market.
According to the data, Opai Home Furnishing was founded in 1994 and was once the first listed company in China's custom home furnishing industry with a market value of more than 100 billion. However, at present, the company's latest market value is only about 42 billion yuan, a decrease of 60% from the peak. As of the end of the first quarter of this year, the company had about 20,900 shareholders.
Editor: Huang Mei
Review: Muyu