\u3000\u3 Shengda Resources Co.Ltd(000603) 816 Jason Furniture (Hangzhou) Co.Ltd(603816) )
Under the catalysis of consumption upgrading and leading scale advantages, the pattern of software home furnishing industry has been continuously optimized. The company continues to expand its market share as a leading product. In the future, driven by the integration of the whole house and the strength of domestic and foreign sales, the performance is expected to maintain high-speed growth. First coverage, give buy rating. Key points supporting rating
Promote the layout of globalization and remain the industry leader. The company started with sofa business and expanded bed and customized home business in 2010, and 2017 respectively. While strengthening the domestic sales business, the company actively expands the overseas market. In 2020, the overseas business revenue was 4.65 billion yuan, accounting for 36.7%. Driven by the coordinated efforts of domestic and foreign sales, the company’s total revenue will achieve a contrarian growth of 14.2% in 2020. The company expects to achieve a net profit of RMB 1.65-1.73 billion in 2021, with double high growth in revenue and net profit.
Optimize the pattern of software home industry. 1) Steady growth of industry scale: in 2020, the scale of sofa / mattress was 66.6 billion yuan / 70.8 billion yuan respectively, which has maintained a steady growth trend in recent years. With the increase of penetration and consumption upgrading in the future, the unit price is expected to rise, and there is still much room for improvement. 2) Continuous optimization of the industry structure: the consumption upgrading trend promotes the importance of brand and product experience. The leader is expected to continuously improve the market share by virtue of high-quality products and large-scale production. In 2020, the sofa CR2 is about 13.8% and the mattress Cr5 is about 17.3%, which is a significant increase compared with 9.6% and 12.1% in 2018.
Develop high potential products, and domestic and foreign sales drive high income growth. 1) Sofa business: the company has cultivated functional sofas through acquisition and building its own brand. The CAGR of functional sofas in recent four years is 39.2%, which is expected to promote the steady growth of sofa business in the future. 2) Mattress business: the company launched a number of high-end star products while developing mid-range mattresses. The domestic sales CAGR of mattresses in recent five years is 32.7%, which is expected to maintain a high-speed and large-scale trend in the future. 3) Export business: supported by the high demand for real estate in the United States and the company’s high-quality customer structure, export revenue is expected to achieve long-term steady growth and form a two wheel drive with domestic sales.
Profit forecast and valuation
It is estimated that the company’s revenue from 2021 to 2023 will be 17.67/21.68/26.01 billion yuan respectively, and the net profit attributable to the parent company will be 16.8/21.2/2.59 billion yuan, corresponding to 26 / 21 / 17 times of PE respectively. The company continues to expand the number of channels and optimize stores, which is expected to expand its own advantages. First coverage, give buy rating.
Main risks of rating
The price of raw materials fluctuated, the Sino US trade war intensified, and the expansion of new categories did not meet expectations.
