On December 8, the State Council Information Office held a regular policy briefing of the State Council to introduce the relevant situation of the 14th five year plan to promote agricultural and rural modernization. The director of the rural economy Department of the national development and Reform Commission said that we should promote the upgrading of the consumption ladder of rural residents. We will take action to promote rural consumption, encourage qualified areas to carry out actions to update rural household appliances, and implement subsidies for furniture and home improvement and a new round of automobile travel to the countryside.
The central bank and other three ministries and commissions collectively responded to the risk problems of real estate enterprises, and the short-term impact of Evergrande event may be further improved. On December 3, the relevant person in charge of the central bank said that the risk of individual real estate enterprises in the short term will not affect the normal financing function of the medium and long-term market. Recently, domestic real estate sales, land purchase and financing have gradually returned to normal. The relevant person in charge of the CSRC said that the financial indicators of listed company bond issuers are generally healthy, and the spillover impact of individual real estate enterprise risks on the operation of the capital market is controllable, so as to support the reasonable and normal financing of real estate enterprises. A spokesman for the China Banking and Insurance Regulatory Commission said that at this stage, we should focus on meeting the needs of first suite and improved housing mortgage, reasonably issuing real estate development loans, M & A loans and increasing support for indemnificatory rental housing. In addition, the Guangdong provincial government is actively guiding Evergrande to resolve the debt risk in a stable and orderly manner.
In the first three quarters, the income performance of the household sector was beautiful, and the leading household enterprises took the lead in the industry. Since Q2, with the impact of Evergrande credit event, the decline of new house sales in a single month and the continuous correction of concerns about the high base in the second half of the year. In the first three quarters, the household industry as a whole achieved good performance, and the leading household performance was even better. 21q1-3 Jason Furniture (Hangzhou) Co.Ltd(603816) / Xlinmen Furniture Co.Ltd(603008) / Oppein Home Group Inc(603833) achieved revenue of 13.2/5/14.4 billion yuan respectively, with a year-on-year increase of + 54.8% / + 46.0% / + 48.0%, of which the growth rate of Q3 revenue was + 41.4% / + 31.1% / + 30.1% respectively. On the profit side, the growth rate of software is higher, and the industry is under pressure due to the rising cost of raw materials and the intensification of the competition pattern of bulk business. The growth rate of net profit attributable to parent company of 21q1-3 Jason Furniture (Hangzhou) Co.Ltd(603816) / Xlinmen Furniture Co.Ltd(603008) / Oppein Home Group Inc(603833) was 22.6% / 107.5% / 45.7% respectively, of which the growth rate of single Q3 was 7.2% / 13.4% / 14.6% respectively.
The credit crisis of individual real estate developers has affected the short-term performance of some companies, and some enterprises have actively promoted solutions. In the medium and long term, the bulk business is developing in a healthy direction. As of 2021q3, Jiangshan Oupai Door Industry Co.Ltd(603208) held 682 million yuan of commercial bills of Evergrande group, of which 318 million yuan had not been cashed yet. In the first three quarters of 2021, Guangdong Dongpeng Holdings Co.Ltd(003012) revenue growth and profit decline were mainly due to the overdue payment of Evergrande’s commercial bills. The company reassessed the impairment of receivables, increasing the credit impairment by 182 million yuan. At the same time, through the company’s test, the company accrued a total of 211 million yuan for asset impairment reserves in the first three quarters. The company actively communicated and promoted the debt recovery solution focusing on asset debt repayment. We believe that the credit crisis of individual real estate developers affects the short-term performance of some companies. In the long run, it is expected to promote the optimization of payment and settlement mode of bulk business, the improvement of risk control awareness and risk control mechanism within the company, and the gradual highlighting of the importance of multiple channels such as retail and packaging.
At present, we are firmly optimistic about the allocation opportunities of the home sector. We expect that this year’s leading home furnishing enterprises will still maintain good growth under the influence of a high base, the performance of software home furnishings will be more beautiful, and the concentration of the home furnishing industry will continue to improve. Optimistic about the undervalued home furnishing sector, it is recommended to focus on the software with high growth and undervalued value: Xlinmen Furniture Co.Ltd(603008) , Jason Furniture (Hangzhou) Co.Ltd(603816) , Minhua holdings, and the customized sector: Oppein Home Group Inc(603833) , Zbom Home Collection Co.Ltd(603801) , Suofeiya Home Collection Co.Ltd(002572) .
Risk tips: impairment risk of accounts receivable and notes, rising risk of raw materials, macroeconomic downside risk and real estate policy risk;
