Jason Furniture (Hangzhou) Co.Ltd(603816) (603816)
The company announced that it plans to invest 1.037 billion yuan to build a production base in Monterrey, Mexico. The project is mainly engaged in the production of high-end software sofas, high-end intelligent function sofas, high-end mattresses and other products. Through new technologies such as big data, Internet of things and cloud computing, the company will build an intelligent factory and realize the intelligent control of the whole process of household production. The planned land of the project is about 545 mu. It is expected to start in the first half of 2022. The construction period of the project is 36 months. It is expected that the phase I project will be put into operation in the middle of 2023. When the overall project reaches the target, it is expected to realize an operating revenue of about 3.019 billion yuan.
The production capacity of bases in Vietnam and Mexico has been gradually released, the stability of supply chain has been enhanced, and the efficiency of order delivery has been greatly improved. In view of the risk of trade friction between China and the United States, the company actively prepared to build overseas factories and optimize the export product structure. The annual output of 450000 standard sets and 500000 standard sets of upholstered furniture products in Vietnam were arranged in 2019 and 2020 respectively. As of 21h1, the progress of the project was 90% and 42% respectively. In November 2019, in order to meet the strong demand of the U.S. market, the company started the phase I project of huafushan manufacturing base in Mexico, and completed the expansion of the project in 2021. Mexico’s proximity to the US market provides the basis and convenience for the company to further explore the North American market. On the one hand, it avoids the uncertainty of trade policy and enhances the stability of the supply chain; On the other hand, Mexican factories are close to end consumers and customers. It is expected that they can be delivered within 4 weeks after ordering. Compared with 12-14 weeks for shipment from China, the delivery efficiency is significantly improved.
The product strength of advantageous categories in the North American market remains leading, and diversified extension products are expected to open up export growth space. 21h1 company accurately grasped the popular market style in North America, added medium and low-end product structure platform, improved production efficiency and consolidated the leading advantage of advantageous categories. In the first half of the year, the export revenue of 21h1 company was 2.954 billion yuan, a year-on-year increase of + 84.91%. With the gradual implementation of the Mexico base project, it is conducive for the company to rapidly expand production scale, improve production efficiency, increase market-oriented product styles, further enrich the matrix of export products, and is expected to promote the continuous growth of export revenue while ensuring product quality.
Profit forecast and Valuation: the company is the leader of China’s software home furnishings. Domestic sales gradually strengthen the synergy of regional retail centers, and strive to move towards large home furnishings in all categories and through multiple channels. With the gradual release of overseas production capacity, export products are more diversified, opening up the growth space of export market, and optimistic about the long-term development of the company and the accelerated improvement of leading concentration, It is estimated that the company’s net profit attributable to the parent company in 21 / 22 is RMB 1.67/2.08 billion respectively, with a year-on-year increase of + 97.7% / + 24.2%, and the corresponding PE is 26.7x/21.5x respectively, maintaining the “buy” rating.
Risk warning: land acquisition risk; Risk of construction approval process; Overseas market risk, etc.
