Qumei Home Furnishings Group Co.Ltd(603818) (603818)
Key investment points
Deep ploughing technology drives products to lead the industry
The technology update leads the industry, and the casting recliner category leads the product force. In 1970, Ekornes applied for the patent glide for stressless and launched the world's first recliner to meet the movement and support needs when sitting in 1971, becoming the pioneer of movable recliner. Since then, the company has continued to cultivate the category of reclining chairs, and continuously took the lead in introducing new technologies in the industry to strengthen the user experience and product strength, including the launch of plus in 1991 ™、 Ergoadapt in 2009 and balanceadapt in 2014 ™ Wait. The company's strong product strength has been fully recognized by the American Spinal Nerve Association. It is the only recliner recognized by the American Spinal Nerve Association in the world and recommended by doctors.
Efficient operation under strong product power to achieve a world-class brand
Relying on targeted marketing means under strong product power + global channel layout + differentiated competition, stressless has gradually grown into the world's first comfortable chair brand. Marketing means: after establishing a position in the hearts of consumers through strong product strength, the company has enriched brand marketing means to make the label that the product is the "most comfortable chair in the world" more popular. The seat of Pope John Paul II in the car is white stressless, which is used as the Pope's throne and highlights the brand value. Channel layout: stressless continues to sink, making the channel. At present, there are 7000 sales outlets around the world. Stressless products are distributed in more than 240 countries around the world. The global layout strengthens the positioning of the world's top brands and the perception of global users, and the company has a global audience of more than 85 million. Differentiated competition: stressless brand is positioned as the first echelon. Compared with natuz with the highest pricing, it has outstanding cost performance, and there are no competitors in the same price segment. As a result, the company has gradually grown into the world's first comfortable chair brand and the global champion in sales. In the past 20 years, the market share has reached 19.4% and the brand strength is leading.
The establishment of efficient retail stores is expected to replicate quickly
With strong brand power and product power, the strategy of streamlining SKU's large single product helps stressless form an efficient retail store. The company focuses on the single chair category, with fewer SKUs. There are only 10 SKUs in the online mall. Therefore, the space required for a single store is small, the investment and operation difficulty of agents are low, and the scale of stores in the company's business center is only 30-50 square meters. From the perspective of single store profit, stressless's brand positioning and high selling price give the channel more profit space. According to the company's announcement, the average ex factory price of stressless is 5286 yuan. Considering discounts and other errors, the channel side conservatively assumes that the average price is 18000 yuan and the dealer's gross profit margin exceeds 60%. Therefore, stressless's floor efficiency and single store profit take the lead under the same passenger flow, conversion rate and store scale.
The company plans to open 700-800 stores in 4 first tier cities, 18 strong second tier cities and 47 second-tier cities in the next three years, and realize an income of 1 billion yuan by 2025. We continue to be optimistic about the prospect of this minimalist retail business model with small initial investment, low operation difficulty, strong single store profitability and short recovery cycle in China.
After the acquisition, the management improved, Ekornes burst into growth momentum, Qumei comprehensively improved its management after the acquisition, and the company burst into growth momentum. Under the strong product power, brand power and efficient business model, the company's previous slow development was mainly affected by the management. From 1993 to 2018, Ekornes was controlled by various financial institutions such as Norwegian pension funds. Thus, the revenue CAGR from 2007 to 2018 was only 0.35% (excluding the increment of img acquisition), and the average dividend payment rate reached 83%. After Qumei acquired the company, it made great efforts to grow. On the one hand, it replaced the management, on the other hand, it gave sufficient incentives to the new management, and the new management was more active in the three-dimensional expansion of customers, product categories and markets, and its management ability was fully improved. As a result, Ekornes burst into growth momentum. Under the influence of the epidemic in the past 20 years, Ekornes The overall growth rate is 3%, and it is expected to increase by 39% in 21 years.
Profit forecast and valuation
Ekornes has released the growth momentum due to its strong brand power and product power after the change of management. With the gradual expansion of the replicable Business Center store model in China, Ekornes is expected to accelerate its growth. We expect Ekornes to achieve revenue of 3.5/42/4.8 billion yuan, net profit of 4.1/5.3/640 billion yuan and China Qumei to achieve revenue of 2 / 23 / 25 billion yuan in 21-23 years, The net profit is RMB 180 / 180 / 200 million. In conclusion, it is expected that the company will achieve an overall revenue of RMB 56.3/66.7/75.7 billion in 21-23 years. After considering financial expenses and asset amortization, the corresponding attributable profits to the parent company are RMB 280 / 490 / 680 million respectively. With reference to the valuation of comparable companies, the company is given a 22-year 20x PE, Corresponding to the 22-year target market value of RMB 10-14 billion (RMB 14 billion is based on the net profit of RMB 700 million after excluding the interest expense generated by Ekornes and amortization of intangible assets), maintain the "buy" rating.
Risk statement
Stressless grew less than expected; China's market competition intensifies; The introduction of strategic investors failed.
