\u3000\u3000 Easyhome New Retail Group Corporation Limited(000785) (000785)
Event: on January 26, Easyhome New Retail Group Corporation Limited(000785) released the annual performance forecast for 2021. The company is expected to realize the net profit attributable to the parent company of RMB 2.300-2.580 billion, with a year-on-year increase of 68.75% – 89.29%; The net profit attributable to the parent company after deduction was RMB 2.300-2.580 billion, with a year-on-year increase of 76.65% – 98.15%. In 2021q4, the company realized a net profit attributable to the parent company of 581-861 million yuan, a year-on-year increase of 29.77% – 92.26%; The net profit attributable to the parent company after deduction was 591-871 million yuan, with a year-on-year increase of 49.74% – 120.70%. Beijing Easyhome New Retail Group Corporation Limited(000785) home chain Co., Ltd., a wholly-owned subsidiary of the company, is expected to achieve a net profit of RMB 2.450-2.600 billion after deducting non recurring profits and losses, exceeding the profit target of gambling.
Household prosperity rebounded + leading advantages were highlighted. Q4 performance increased significantly and the gambling target was exceeded. According to the median calculation of the announcement, the net profit attributable to the parent company in 2021q1-4 was 2.440 billion yuan, a year-on-year increase of 79.06%. In 2021q4, the company realized a net profit attributable to the parent company of 721 million yuan, a year-on-year increase of 61.01%. In 2021, the company implemented the new lease standard for the first time, recognized the depreciation of use right assets during the lease term and included them in the operating cost; Amortization of unrecognized financing expenses shall be included in interest expenses. Therefore, compared with the previous calculation of rent expenditure using the straight-line method, the profit side of the company may usher in new growth after adopting the new leasing standards.
After the epidemic, the prosperity of the household industry continued to rise, the company’s market competitiveness was prominent, the marketing effect was remarkable, and the brand influence was continuously improved. At present, the company’s home decoration and home furnishing industry service platform has completed the closed loop. The digital development and operation of six major tracks, including every flat and every house designer, home furnishing industry commodity retail operation platform (Dongwo), incredibly decoration, auxiliary materials and incredibly housekeeper, continue to increase, the full link service and delivery ability are becoming more and more mature, and the performance is growing rapidly.
The company accelerates the national layout with the “asset light” chain operation mode. By the end of December 2021, Easyhome New Retail Group Corporation Limited(000785) has operated 421 home stores in China. In 2021, the company opened 50 new home stores and achieved the goal of opening stores throughout the year. By the end of December 2021, the company had signed up more than 700 stores. Easyhome New Retail Group Corporation Limited(000785) will continue to accelerate the development of home stores nationwide and accelerate the penetration in the sinking market. In the future, the company will accelerate the chain expansion of physical stores, especially in the south of the Yangtze River and county-level cities.
Digital transformation creates an industrial service platform for the home decoration and home furnishing industry, and a new profit model begins to appear. The company has actively expanded its own and IP business, and built the delivery and service capabilities of key nodes such as design, construction, procurement of base materials and auxiliary materials, sales of smart home and household products, logistics and after home decoration services. At present, the company’s home decoration industry service platform has completed the closed loop. The digital strategy of Easyhome New Retail Group Corporation Limited(000785) is to build an industrial service platform for home decoration and home furnishing industry in the digital era, mainly including every flat and every house designer and home furnishing industry commodity retail operation platform Dongwo app that provides SaaS services from design, construction drawing, quotation budget to construction management for designers and home decoration companies. In addition, the company has also built a decoration base material procurement platform, smart home retail operation platform, Shangwu zhihuijia, smart logistics platform and home decoration service platform. For the coordination of various links, the company will focus on the service capacity construction of every flat, every house designer and Dongwo app, supplemented by the delivery capacity of other track platforms, so as to realize the external development of the industrial service platform of the home decoration industry to the home industry and the empowerment of the industrial chain of the home industry.
Since its launch in June, Dongwo app, a commodity retail operation platform in the home industry, has expanded its business to six cities: Beijing, Zhengzhou, Chongqing, Xi’an, Wuhan and Chengdu. At present, it is focusing on improving its service capacity for b-end merchants. By September 2021, 4000 + brand stores and 50000 + spus had been launched, with nearly 500000 registered users.
Investment suggestion: Easyhome New Retail Group Corporation Limited(000785) is the leader of China’s Pan home industry, and the asset light mode of “direct marketing + franchise” is developed efficiently. It will join hands with Alibaba to lead the new home retail, expand its own IP business and provide home decoration and home integration services. We estimate that the operating revenue from Easyhome New Retail Group Corporation Limited(000785) 2021 to 2023 will be 13.028 billion yuan, 14.803 billion yuan and 16.826 billion yuan, with a year-on-year increase of 44.87%, 13.62% and 13.67%; The net profit attributable to the parent company was 2.483 billion yuan, 2.818 billion yuan and 3.231 billion yuan, with a year-on-year increase of 82.21%, 13.51% and 14.64%. The corresponding PE was 12.9x, 11.4x and 9.9x, and the investment rating of Buy-A was given.
Risk tip: the chain development of home stores is less than the expected risk; The promotion of new retail and digital applications is less than expected.
