Qumei Home Furnishings Group Co.Ltd(603818) (603818)
Event: Qumei runto s.ar.l, a wholly-owned subsidiary of the company, signed a letter of intent for strategic cooperation and investment with Zhuhai Hillhouse investment and Yinti Consulting Co., Ltd. Hillhouse investment and Yinti consulting plan to invest 200 million yuan and 25 million US dollars respectively by increasing capital to Qumei runto or acquiring old shares. This equity financing will introduce high-quality strategic investors for the subsidiary, and the final valuation, transaction price and other details shall be subject to the formal investment contract.
comment:
The equity acquisition introduced high-quality war investment, and the valuation of Ekornes was improved. Qumeirunto is a special-purpose subsidiary established when the company acquired ekorneas, the leader of Norwegian comfort chair. In 2020 and the first three quarters of 2021, qumeirunto realized revenue of NOK 3.482 billion and NOK 3.144 billion, and net profit of NOK 383 million and NOK 402 million. In July 2021, ekornesqmholdingas, a Norwegian subsidiary of the company, acquired ekornesqmholdingas9 held by Ruisi holding company limited in cash 5% equity, the corresponding valuation of ekornesas is RMB 5.768 billion, and the corresponding valuation of ekornesas in this transaction is RMB 6.045 billion, which is slightly higher than that in the last transaction, and the quality of the subject matter has been recognized by high-quality war investors.
Ekornes's business layout is leading in the world, and high-quality war investment enables its development. Ekornes is a leading company in the global comfort chair industry, with high-quality high-end brands such as stressless, IMG and svane. After the acquisition, the company optimized its operation, expanded its product categories, business model and Chinese market, and promoted the rapid growth of revenue and profit. Hillhouse investment and Yinti consulting have rich investment experience and resources. They have worked deeply in many consumer goods industries for many years. They value Ekornes's leading position in the global high-end comfortable chair industry. After completing the investment, they will provide empowerment for the company and further strengthen their competitive advantage.
Profit forecast and investment rating: this transaction has not been completed. We maintain the company's EPS forecast of 0.50/0.87/1.14 yuan from 2021 to 23, and the current stock price corresponds to 15.64 times PE in 22 years. The company's overseas business keeps pace with the rapid growth of revenue, repays interest bearing liabilities through various ways, reduces financial expenses, and continuously improves its profitability. We are optimistic about the company's large long-term development space and the continuous confirmation of performance improvement. At present, the valuation is still at a low level and maintains the "buy" rating.
Risk factors: the improvement of financial expenses is less than expected, the regulation risk of downstream real estate market, the intensification of industry competition, the growth of overseas consumption is lower than expected, etc.
