Qumei Home Furnishings Group Co.Ltd(603818) (603818)
Key investment points
The company's performance has been under pressure in recent years and the market has not paid enough attention
The high financial expenses arising from the acquisition have put pressure on the company's performance in recent years. Qumei Home Furnishings Group Co.Ltd(603818) after listing in 2015, the main business developed rapidly, and the net profit attributable to the parent company in 16 / 17 increased by 58% and 33% respectively year-on-year. In 2018, the company spent 3.677 billion yuan to acquire ekornes90 5% equity, forming a large number of interest bearing liabilities and paying interest of RMB 139 / 293 / 261 million respectively in 18-20 years. The high interest expense superimposed the adjustment of distribution channels in China since 2018 and the impact of the epidemic, and the net profit attributable to the parent company in 18-20 years was -0.59/0.82/104 million yuan respectively.
21q3 was disturbed by short-term events and was again less than expected. Since 2020q4, the company's performance has recovered quarter by quarter. In 2020q4 / 2021q1 / 2021q2, the revenue is RMB 1.377/11.49/1.364 billion, and the net profit attributable to the parent company is RMB 73/0.61/0.67 billion.
Affected by the epidemic situation in Southeast Asia, plant shutdown, high sea freight and raw material costs, and 20 million asset impairment loss caused by cooperation with Evergrande, the performance in the third quarter was again lower than expected. 21q3 achieved a revenue of 1.229 billion yuan (YoY + 7.52%), and a net profit of 56 million yuan (yoy-27.44%). At the current time point, we believe that the company's darkest hour has passed. On the one hand, Ekornes ushered in a performance release inflection point after getting rid of the impact of the epidemic, on the other hand, Qumei in China regained growth. In addition, the reduction of raw materials & shipping costs and interest expenses led to a decline in costs and expenses, and the company's performance ushered in an upward inflection point
Ekornes has entered the stage of large-scale growth
Positioning medium and high-end, streamlining SKU, high quality and high brand strength. Ekornes (accounting for 59% of the company's revenue in 20 years) is the top recliner company in Norway and has a 50 year development history. It owns the world's first high-end brand of comfortable chair stressless, the high-end mattress brand svane and the medium and high-end brand img. Stressless (accounting for 74% of Ekornes's revenue in 20 years) focuses on comfortable chairs, with streamlined SKUs and top brand and product strength. It is known as "the most comfortable chair in the world" , its selling price Gross margin (51%) far exceeded the competitive products. After changing the management in early 2020, Ekornes gradually entered the stage of large-scale growth. In 2019, Ekornes realized a revenue of 2.45 billion yuan and a net profit of 228 million yuan. At the beginning of 2020, Qumei changed the management on the one hand, gave sufficient incentives to the new management on the other hand, and enabled customers, products and channels. Therefore, Ekornes still realized a revenue of 2.5 billion yuan under the influence of the epidemic in 20 years (YoY + 3%), with a net profit of 280 million yuan (YoY + 11%); in 2021h1, the company achieved rapid growth, with a revenue of 1.612 billion yuan (YoY + 47%) and a net profit of 208 million yuan (YoY + 121%). The specific measures for Ekornes to enter the stage of large-scale growth are as follows:
(1) Expand large customers: since the new CEO (appointed by Qu Mei) took office, Ekornes began to expand large customers and successfully won Wal Mart, Costco and other large customers with img brand. 21h1 entered the top 20 dealers of stressless and img brand, with a total of 8 new customers, accounting for 10% of sales. The expansion of new customers made the company obtain more customers α It is expected that in 22 years, as the company continues to make efforts, the revenue of large customers is expected to further increase.
(2) Expand the depth and breadth of products: after the company acquired Ekornes in 18 years, it assisted it in new product development. On the one hand, Ekornes deeply cultivated the advantageous categories and launched a variety of new comfortable chairs in the U.S. market to promote the steady improvement of U.S. market revenue. On the other hand, it actively expanded the categories and launched stressless brand software sofa, tea table, dining table chair and other finished furniture of non comfortable chairs in the living room It makes up for the deficiency of the style of stressless brand supporting products.
(3) Develop the Chinese market, with a target revenue volume of 1 billion in three years: Ekornes develops the Chinese market by relying on Qumei channel resources. Stressless brand is rapidly deployed in China by the development model of independent investment promotion and independent store opening. There are nearly 100 stressless stores in 21h1 China, with an order growth rate of more than 90%. Img brand quickly completes its coverage in the form of store in store and relying on Qumei's mature channels. China's comfortable chair market The market is still in the introduction period, with broad room for penetration improvement. The company's brand positioning is medium and high-end, and its products and market reputation are excellent. It is expected to fully benefit from the growth dividend of the industry.
China Qumei has expanded its channels and made great efforts in packaging and bulk business
Big home has landed well and has regained growth in 21 years. China Qumei includes two business segments: finished products and customization, with 20-year revenue accounting for 48% / 42% respectively. The company is one of the few enterprises in China that have strong customization and finished product manufacturing capacity and realize the integration of large home furnishings. In the process of promoting the big home strategy, franchisees are limited by capital and capacity, After making great progress in 2016 / 2017 (the revenue of China Qumei in 2016 / 17 increased by 33% / 26% year-on-year respectively), it entered the adjustment stage (the revenue of 18-20 years decreased by 12% / 8% / 4% respectively). In terms of specific data, from 2017 to 2020, the number of stores of the company was 875 / 1036 / 1067 / 1086, including 861 / 1015 / 1049 / 1067 dealerships respectively. The growth has slowed down since 18 years, and the number of Direct stores has remained stable on 14 / 21 / 18 / 19. From the perspective of revenue scale, the revenue of Direct stores in 20 years has reached 215 million yuan, which is reflected by the positive growth of 2% under the influence of the epidemic Business resilience. In the 21st year, with the steady progress of the big home strategy and the rapid growth of innovative business, the annual revenue is expected to grow by more than 20%.
Looking forward to the future, as the impact of the epidemic subsides further and the capital pressure weakens, the company's expansion at both ends of the channel and business will drive future growth:
(1) It is expected to open 300 stores in the year of 22: from 19 to 21, the company focused on the improvement of single store level through multiple means, and the expansion of stores slowed down. In the year of 22, the company will focus on store expansion, and it is expected to open 300 stores, and quickly make up for the company's blank market through small model stores (fast input and fast output).
(2) Incremental contribution of bulk business: the target market of bulk business of the company is public rental housing and talent apartment, and the cooperative customers are mainly real estate companies and group companies with the background of state-owned enterprises and central enterprises. The revenue in 2021h1 exceeded 50 million yuan, the number of engineering business dealers increased rapidly, and the company initially has the ability to undertake projects and provide services covering the national market. In addition, the brand of bulk business "Yaoxinjia" began to attract investment, which is expected to help the company further approach consumers and seize users.
Reduce costs and control fees to show performance flexibility
(1) Short term factors such as rising costs have gradually subsided, and the gross profit level may continue to rise. In response to rising costs in 21 years, the company raised prices by 5% in China and 10% overseas at the end of June. However, the price increase reflects that the revenue will take about February, and the Q4 gross profit margin will benefit from the price increase. In addition, the current raw material and shipping costs have fallen, and it is expected that the gross profit margin will continue to increase in 22 years.
(2) In terms of financial expenses, the company will actively promote debt replacement and reduce the interest rate. On the other hand, it will reduce the debt level by introducing strategic investors and its own funds. It is estimated that the interest expenses in 21-23 years will be RMB 2 / 1.5/100 million respectively. In terms of sales expenses, with the continuous volume of Ekornes's overseas business, the sales expense rate will benefit from regulation The model effect will continue to decrease, driving Ekornes to improve its profit margin and show performance flexibility.
Specific measures for Ekornes to enter the stage of large-scale growth:
(1) Expand large customers: since the new CEO (appointed by Qu Mei) took office, Ekornes began to expand large customers and successfully won Wal Mart, Costco and other large customers with img brand. 21h1 entered the top 20 dealers of stressless and img brand, with a total of 8 new customers, accounting for 10% of sales. The expansion of new customers made the company obtain more customers α It is expected that in 22 years, as the company continues to make efforts, the revenue of large customers is expected to further increase.
(2) Expand the depth and breadth of products: after the company acquired Ekornes in 18 years, it assisted it in new product development. On the one hand, Ekornes deeply cultivated the advantageous categories and launched a variety of new comfortable chairs in the U.S. market to promote the steady improvement of U.S. market revenue. On the other hand, it actively expanded the categories and launched stressless brand software sofa, tea table, dining table chair and other finished furniture of non comfortable chairs in the living room It makes up for the deficiency of the style of stressless brand supporting products.
(3) Develop the Chinese market, with a target revenue volume of 1 billion in three years: Ekornes develops the Chinese market by relying on Qumei channel resources. Stressless brand is rapidly deployed in China by the development model of independent investment promotion and independent store opening. There are nearly 100 stressless stores in 21h1 China, with an order growth rate of more than 90%. Img brand quickly completes its coverage in the form of store in store and relying on Qumei's mature channels. China's comfortable chair market The market is still in the introduction period, with broad room for penetration improvement. The company's brand positioning is medium and high-end, and its products and market reputation are excellent. It is expected to fully benefit from the growth dividend of the industry.
China Qumei has expanded its channels and made great efforts in packaging and bulk business
Big home has landed well and has regained growth in 21 years. China Qumei includes two business segments: finished products and customization, with 20-year revenue accounting for 48% / 42% respectively. The company is one of the few enterprises in China that have strong customization and finished product manufacturing capacity and realize the integration of large home furnishings. In the process of promoting the big home strategy, franchisees, limited by capital and capacity, entered the adjustment stage after making rapid progress in 2016 / 2017 (the revenue of China Qumei increased by 33% / 26% year-on-year in 16 / 17) and entered the adjustment stage (the revenue in 18-20 years decreased by 12% / 8% / 4% respectively).
In terms of specific data, from 2017 to 2020, the number of stores of the company was 875 / 1036 / 1067 / 1086 respectively, including 861 / 1015 / 1049 / 1067 distribution stores respectively. The growth has slowed down since 18 years, and the number of Direct stores has remained stable on 14 / 21 / 18 / 19. From the perspective of revenue scale, Direct stores have achieved a revenue of 215 million yuan in 20 years, and still achieved a positive growth of 2% under the influence of the epidemic, reflecting business resilience. In the 21st year, with the steady progress of the big home strategy and the rapid growth of innovative business, the annual revenue is expected to grow by more than 20%.
Looking forward to the future, as the impact of the epidemic subsides further and the capital pressure weakens, the company's expansion at both ends of the channel and business will drive future growth:
(1) It is expected to open 300 stores in the year of 22: from 19 to 21, the company focused on the improvement of single store level through multiple means, and the expansion of stores slowed down. In the year of 22, the company will focus on store expansion, and it is expected to open 300 stores, and quickly make up for the company's blank market through small model stores (fast input and fast output).
(2) Incremental contribution of bulk business: the target market of bulk business of the company is public rental housing and talent apartment, and the cooperative customers are mainly real estate companies and group companies with the background of state-owned enterprises and central enterprises. The revenue in 2021h1 exceeded 50 million yuan, the number of engineering business dealers increased rapidly, and the company initially has the ability to undertake projects and provide services covering the national market. In addition, the brand of bulk business "Yaoxinjia" began to attract investment, which is expected to help the company further approach consumers and seize users.
Reduce costs and control fees to show performance flexibility
(1) Short term factors such as rising costs have gradually subsided, and the gross profit level may continue to rise. In response to rising costs in 21 years, the company raised prices by 5% in China and 10% overseas at the end of June. However, the price increase reflects that the revenue will take about February, and the Q4 gross profit margin will benefit from the price increase. In addition, the current raw material and shipping costs have fallen, and it is expected that the gross profit margin will continue to increase in 22 years.
(2) In terms of financial expenses, the company will actively promote debt replacement and reduce the interest rate. On the other hand, it will reduce the debt level by introducing strategic investors and its own funds. It is estimated that the interest expenses in 21-23 years will be RMB 2 / 1.5/100 million respectively. In terms of sales expenses, with the continuous volume of Ekornes's overseas business, the sales expense rate will benefit from regulation The model effect will continue to decrease, driving Ekornes to improve its profit margin and show performance flexibility.
