\u3000\u3 China Vanke Co.Ltd(000002) 293 Luolai Lifestyle Technology Co.Ltd(002293) )
Key investment points
China's leading home textile industry focuses on the main business, multi brand and all-channel operation Luolai Lifestyle Technology Co.Ltd(002293) was established in 1992 and is the first brand in the market share of bedding in China from 2005 to 2020. From 2009 to 2015, the company successively established home textile brands lecho LoVo (positioning the mass market), Luolai children (medium and high-end) and langwan (high-end). From 2015 to 2017, the company successively acquired Japanese towel brand neiye (high-end), American furniture brand Lexington (high-end) and China's old home textile enterprise dinosaur life (Volkswagen), forming a multi brand matrix focusing on home textile products. In terms of channels, the company's furniture products are mainly sold in the United States (19.9% of American furniture revenue in 2021h1), and home textile products are mainly sold through Chinese franchise channels (27.2% / 6.8% / 33.9% / 12.3% of online / direct / franchise / other channel revenue in 2021h1 respectively). As of 2021h1, there are 2274 Chinese terminal stores (250 Direct stores + 2024 franchise stores).
Benefiting from the standard attribute of home textiles, which is suitable for online sales, the extension of consumers' home time after the epidemic, and the continuous prosperity of American real estate, the company's revenue and profit maintained positive growth in 2020 and the first three quarters of 2021, which was less affected by the epidemic. 1) 2020: revenue + 1.04% year-on-year, of which American furniture revenue + 4.4% year-on-year, accounting for 18.4%, home textile online / direct / franchise / other channel revenue + 26.3% / - 10.4% / - 11.4% / - 5.1% year-on-year, accounting for 28.9% / 6.8% / 33.7% / 12.2% respectively; Net profit attributable to parent company + 7.13% year on year. 2) 2021: 2021q1-q3 revenue + 22.8% / 17.8% compared with the same period in 2019, and net profit attributable to parent company + 35.5% / 37.1% compared with the same period in 2019. In terms of channels, the revenue of furniture in the United States increased by 47.1% in 2021h1, and the revenue of home textile online / direct / franchise / other channels increased by + 21.8% / + 28.0% / + 30.8% / + 46% year-on-year respectively. Among them, there were 250 direct / franchise stores in 2024 and - 7 / + 45 stores respectively compared with the end of 2020. The sales of Direct stores opened for more than 12 months increased by 47.1% year-on-year. We expect that the company will have a net increase of more than 100 stores in 2021, and the revenue and net profit are expected to reach the performance evaluation target of the restricted stock incentive plan in 2021 (the revenue or net profit in 2021 / 2022 / 2023 will increase by 10% / 21% / 33% respectively compared with that in 2020).
Clear strategic planning: focus on the main business of home textile, offline store expansion and online dual brand parallel. In the long run, with the improvement of consumers' living standards, home textile products are expected to usher in the trend of accelerated change and category upgrading, and the industry concentration is expected to continue to improve. The company has formulated a clear strategic plan to maintain the leading position in the industry: 1) establish the core strategy of focusing on home textile. 2) Based on the calculation of local population size and residents' income, the store is expected to expand at a net growth rate of nearly 10% per year in the future. 3) Online Luolai and lechuang LoVo are in parallel. Among them, online Luolai is expected to raise the price band by improving product quality and price increase ratio, so as to realize the differentiated positioning with lechuang LoVo, further strengthen the brand image of Luolai, stimulate offline consumption of Luolai brand and promote the overall gross profit rate. 4) It is planned to expand production and increase the proportion of self production, so as to better meet the demand of production capacity and improve the response speed (it was announced in August 2021 to purchase the land use right of Nantong Economic and Technological Development Zone, one of which is to build an intelligent factory). The company expects to expand production by 20% per year in five years from the end of 2022.
Profit forecast and investment rating: the company is the leader of China's home textile industry, with clear strategic planning and less affected by the epidemic. Its performance has been good in the past two years. In 2021, all categories and all channels have achieved good growth (Q4 may slow down due to the impact of double 11 stock preparation). The expansion of stores and production in the weak market is long-term, and the certainty of future performance growth is strong. In the past two years, the dividend ratio has been more than 75%, and the high dividend trend is expected to continue. We expect that the net profit attributable to the parent company from 2021 to 2023 will be + 17.8% / 17.1% / 15.5% year-on-year respectively, and the corresponding PE will be 15.7/13.4/11.6x respectively. The "buy" rating will be given for the first time.
Risk tip: the epidemic has repeatedly affected residents' consumption, and the expansion speed of stores is lower than expected.
