Qumei Home Furnishings Group Co.Ltd(603818) (603818)
In the era of housing stock, the share of brand home continues to increase.
With the renovation of existing houses, the supporting of hardbound houses and the release of the demand for affordable houses, the demand of the home industry is expected to maintain a steady growth. Among them, the leading enterprises based on the big home one-stop track are expected to benefit, and the industry concentration will continue to focus on brand enterprises.
The reform has taken effect, and Qumei is getting better and better.
Since 2019, the company has carried out a series of reforms in the management, channels and products of China Qumei and overseas Ekornes companies, and the reforms have continued to bear fruit. The same store of China Qumei's traditional retail channels has grown steadily, and the new bulk and home decoration channels have contributed to the performance increment. Overseas Ekornes has changed its management level, and its performance is at the best level in history by expanding categories, channels and markets, It is expected that with the development of the Chinese market, it will maintain a rapid growth momentum in the next three years.
The scale of interest bearing liabilities has decreased, and there is much room for the decline of financial costs.
By introducing war investment, operational cash flow debt repayment and other measures, the company continued to steadily promote the work of reducing leverage. By the end of September 2021, the scale of interest bearing liabilities such as short-term loans, non current liabilities due within one year, long-term loans and bonds payable of the company totaled RMB 3.687 billion, a decrease of RMB 380 million compared with the end of 2019. Accordingly, the interest expense decreased from 293 million yuan in 2019 to 261 million yuan in 2020, and the interest expense decreased by 45 million yuan to 169 million yuan in the first three quarters of 2021. It is expected that the company will continue to reduce the scale of interest bearing liabilities through operating cash flow, and the interest expense will continue to decline.
The short-term disturbance factors subside and the profit improvement can be expected.
In the short term, due to the impact of Southeast Asian epidemic, production scheduling, raw material prices and rising sea freight, the company's 2021q3 performance has declined year-on-year. At present, the company's Southeast Asian plant has returned to normal level, raw material prices and sea freight have also fallen one after another, the short-term disturbance factors have subsided, superimposed on the implementation of the company's price increase, and the profit can be improved.
Investment suggestion: continue to be optimistic about Ekornes's renewed growth motivation after the reform, and Qumei's new business volume and the improvement of financial expenses bring about an improvement in the profit side. Maintaining the previous profit forecast, it is estimated that the company's operating revenue in 21-23 years will be RMB 5.303/63.78/7.463 billion and EPS will be RMB 0.53/0.85/1.20 respectively. According to the closing price of RMB 10.11/share on November 26, 2021, the corresponding PE will be 19 times, 12 times and 8 times respectively, maintaining the "buy" rating.
Risk warning: M & A integration is not as expected; Real estate sales are less than expected; Risk of intensified industry competition; The short-term impact of the epidemic exceeded expectations.
