Basic events
The company released 21 interim reports: 21H1 achieved revenue of 4.300 billion (+68.30%, 19H1 +36.84%), net profit attributable to the mother of 446 million (+30.12%, year-on-year 19H1 +14.06%), deducting non-attributable net profit of 408 million (+91.60%, year-on-year 19H1 +17.23%); of which 21Q2 achieved revenue of 2.540 billion (+41.76%, year-on-year 19H1 +29.74%), Attributable net profit was 328 million (-8.68%, 19H1 +15.49% yoY), and net profit after non-attributable was 307 million (+10.25%, yoY 19H1 +14.23%).
Investment essentials
Wardrobe: The proportion of Kang pure board continues to increase, promoting the upward price of customers
Wardrobe & Accessories revenue of 3.459 billion (+57.56%, 20H1 is 2.08 billion wardrobe + 116 million matching), gross profit margin of 37.96%. During the period, the company continued to promote the proportion of high-end package sales & Kang pure board, the proportion of customer orders of Kang pure board increased from 76% of 21Q1 to 87% (the proportion of customers increased from 79% to 86%), and the unit price of wardrobe customers increased by 6.57% year-on-year to 13134 yuan / single. As of the end of 21H1, the number of Sophia counter stores was 2770 (an increase of 51 compared with the end of 20 years), while the company accelerated the sinking of channels during the period, the number of stores in provincial capitals/prefecture-level/fourth- and fifth-tier cities accounted for 14%/22%/64% respectively, and the proportion of contributed revenue was 34%/25%/41% respectively.
Kitchen cabinet wooden door: the matching rate between the retail end and the wardrobe is improved, and the bulk volume is driven by a high increase
(1) Simi kitchen cabinet business: revenue of 562 million yuan (+121.06%) and gross profit margin of 24.38% (+1.19pct) during the period. As of 21H1, there are 1,081 Simi cabinet stores (27 fewer than the end of 20 years), and its retail channels have been matched with wardrobes in first-, second- and third-tier cities, and the matching rate in other cities is nearly 45%. In 21 years, the company plans to open 100 new independent stores of Simi kitchen cabinets.
(2) Wooden door business: revenue of 172 million (+93.81%) during the period, gross profit margin of 16.16% (+6.77pct), after the volume of scale effect gradually appeared. As of 21H1, there were 729 Sophia wooden door integration stores (an increase of 98 from the end of 20), 496 independent stores (an increase of 157 from the end of 20), and 286 Custom Wooden Stores of Huahe Brand (an increase of 43 from the end of 20). The color matching rate of wooden doors and Sophia cabinets reached 70%, and the matching rate of series reached 73.3%.
Bulk channels strengthen customer account period management, and the whole decoration and home improvement channels flourish
(1) Traditional distribution channels: The operational efficiency of dealers has gradually improved, and the amount of single-store delivery has increased by 39.48%/11.81% respectively over the same period in 20/19.
(2) Bulk channels: During the period, the company's bulk channels (including wardrobes, cabinets, wooden doors and others) achieved revenue of about 729 million yuan (+136.83%), accounting for 17.07%, and continued to optimize the customer structure of bulk business and develop high-quality engineering customers.
(3) Decoration channels: During the period, the signing plan with the decoration enterprises was successfully expanded, and there were more than 1,700 direct signing and decoration enterprises of the 21H1 dealer cooperative decoration enterprises superimposed by the company, contributing 135 million yuan in revenue; compared with the annual revenue of 20 years, the revenue doubled.
(4) Milana custom home: as of 21H1 Milana custom home has a total of 214 dealers, 32 stores, the second half of the year will continue to accelerate the completion of the annual 300 investment, 100 stores to open the target, to achieve 100% coverage of first-tier cities, 70% coverage of second-tier cities, 21 years the company set Milana brand revenue target of 100 million.
Factory consolidation dragged down gross profit margins, and large volumes led to a large increase in receivables
21H1 comprehensive gross profit margin of 34.74% (-2.74pct, compared with 19H1 -1.91pct), mainly due to the new plants in Chengdu and Huanggang put into operation and depreciation, resulting in an increase in depreciation, while the proportion of sales in bulk business increased; the expense ratio during the period was 21.78% (-4.30pct, compared with 19H1 -0.63pct); of which the sales expense ratio was 10.10% (-1.84pct, compared with 19H1 -0.88pct); management + R&D expense ratio of 11.15% (-2.37pct, compared with 19H1+0.17pct); financial expense ratio of 0.52% (-0.09pct, compared with 19H1 +0.08pct). On the whole, 21H1 company deducts non-attributable net profit margin of 9.50% (+1.15pct, compared with 19H1-1.59pct).
21H1 company's advance receipts of 780 million yuan (+28.9% year-on-year) ensured the growth of the retail end of Q3; receivables + contract assets of 2.006 billion yuan (+73.7% year-on-year), mainly due to the rapid growth of bulk business. Overall, the company's net operating cash flow during the period was +86 million (-0.99 billion in 20H1).
Earnings forecasts and valuations
In the past 21 years, the company's "omni-channel + multi-brand + all-category" layout has achieved results, and it continues to be optimistic about long-term growth. We expect revenue of 108/ 127.65 / 14.934 billion, an increase of 29.3% / 18.19% / 17% in 21-23 years, respectively, and a net profit attributable to the parent of 14.03 / 16.45 / 1.927 billion, an increase of 17.67% / 17.24% / 17.19%, respectively, and the current stock price corresponds to PE of 12.38X / 10.56X / 9.01X, maintaining a "buy" rating.
Risk Warning
Channel expansion did not meet expectations, and real estate regulation exceeded expectations
Chief Analyst of Light Industry Manufacturing Industry
Master of Engineering, Columbia University, USA. From April 2015 to March 2017, he worked in the research department of China Galaxy Securities, where he was engaged in the research of agriculture, forestry, animal husbandry and fishery industry, and joined soochow Securities Research Institute in April 2017 to engage in light industry manufacturing industry research, and has served as the chief of light industry manufacturing industry since 2018. In 2017, It ranked 5th in the manufacturing industry of New Fortune Light Industry and 3rd place in 2019. In July 2020, he joined the Zheshang Securities Research Institute.
Mobile/WeChat: 18811064824
Ma Li Deputy Director of Zheshang Securities, Head of Large Consumption, Chief Analyst of Textile and Apparel Industry
He holds a bachelor's degree from Nanjing University and a ph.D. in economics from the Chinese Academy of Social Sciences, and currently works at the Zhejiang Securities Research Institute, and has worked for the China Textile Industry Association, China Galaxy Securities Research Department, and soochow Securities Research Institute. In 2019, New Fortune Light Industry and Textile and Garment ranked 3rd, Crystal Ball Textile and Garment Industry Ranked 1st; 2018 Textile and Garment Industry Crystal Ball Ranked 1st; 2016-2017 New Fortune Textile and Garment Industry Ranked 1st; 2015 New Fortune Textile and Garment Industry Ranked 2nd; 2014 New Fortune Textile and Garment Industry Ranked 4th; 2013 New Fortune Textile and Garment Industry Ranked 2nd; 2012 New Fortune Textile and Garment Industry Ranked 4th
Mobile/WeChat: 15601975988
Fu Jiacheng is a researcher in the light industry manufacturing industry
Bachelor of Investment, Master of Central University of Finance and Economics, worked at Soochow Securities Research Institute from July 2019 to May 2020, covering the light industry manufacturing industry, and joined Zhejiang Securities Research Institute in June 2020.
Shuyan Yang, researcher in the light industry manufacturing industry
With a bachelor's degree from Shanghai Jiao Tong University and a master's degree from the Hong Kong University of Science and Technology, he joined the Zheshang Securities Research Institute in March 2021, covering the light industry manufacturing industry.
Mobile/WeChat: 13611883185
Dushan, researcher of light industry manufacturing industry
With a bachelor's degree from Zhejiang University, a master's degree from the University of Illinois and the University of Chinese of Hong Kong, Shenzhen, he joined the Zheshang Securities Research Institute in May 2021, covering the light industry manufacturing industry.
Mobile/WeChat: 15306560432
Disclaimer: The above content is for the reference of institutional investors only and does not constitute investment advice, and the company's value judgment shall be subject to the official report.
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