\u3000\u3 Shengda Resources Co.Ltd(000603) 661 Henglin Home Furnishings Co.Ltd(603661) )
Event overview
Henglin Home Furnishings Co.Ltd(603661) release the plan of issuing shares to purchase assets and raise supporting funds: the company plans to purchase 52.60% equity of Yongyu household by issuing shares. Yongyu household, as the leading enterprise in China's SPC flooring industry, will become a holding subsidiary of the company (the company will hold 94.72% equity of Yongyu household) after the completion of this transaction, Well complement the company's living home business and further give play to the synergy.
Analysis and judgment:
With the promotion of big home strategy, it is proposed to purchase 52.60% equity of Yongyu home, a leading enterprise in China's SPC flooring industry.
Yongyu home is the leading enterprise in China's SPC flooring industry. Its products mainly include SPC flooring, bamboo flooring and other flooring products, as well as bamboo furniture and other household products. In 2021, it achieved a revenue of 1.46 billion yuan, a year-on-year increase of + 64%; The net profit was 107 million yuan, a year-on-year increase of + 15%. The growth rate of profit side was less than that of revenue, which was mainly affected by the sharp rise in the price of upstream raw material PVC. The rapid growth of Yongyu household income is mainly due to the high prosperity development of the industry and the expansion of the company's own customers, production capacity and products. Among them: 1) industry: it benefits from the hot sales in the European and American real estate market, the improvement of the performance of PVC flooring products and the rapid improvement of the penetration rate of PVC flooring, resulting in the high prosperity development of the industry; 2) Customers: the products are mainly sold to mature markets such as Europe and America. Now we have established long-term and stable cooperative relations with American floor decoration material giants such as Shaw industry and international large building materials sales companies such as thd and floor & decor. With the release of factory capacity in Vietnam, the company continues to expand new customers in Europe and America; 3) In terms of production capacity: it has production bases in China and Vietnam, of which the Vietnamese company was established in 2019. At present, the annual production capacity is 650000 square meters. The operation of the Vietnamese factory will help to meet the order needs of customers in Europe and the United States and avoid the impact of trade tariffs on the company; 4) In terms of products: the product strength is leading, with ABA co extrusion structure manufacturing, synchronous flower matching and other technologies, and the products are more beautiful and stable.
Before this transaction, Henglin held 42.13% of the equity of Yongyu home. If the subsequent transaction is completed, Henglin will hold 94.72% of the equity of Yongyu home. Yongyu home will become a holding subsidiary of Henglin, which will well supplement Henglin's living home business and help to give further play to the experience of both parties in market and channel, products and technology, production and operation management Capital and other multi-dimensional synergies to further improve the company's market competitiveness.
The adverse factors are alleviated and the performance is expected to improve marginally.
In the short term, affected by the high base in the same period of last year, tight shipping, the epidemic in Vietnam, exchange rate fluctuations and rising raw material prices, the growth rate of Q3 revenue of the company slowed down and the profitability declined. At present, on the revenue side, the company's traditional business is expected to maintain a good development thanks to the continuous recovery of factory capacity in Vietnam and the easing of maritime transportation capacity, while the new business is expected to further contribute to the increment with the continuous release of doctor kitchen orders and the rapid development of its own brand nouhaus; On the profit side, the prices of some raw materials such as sponge, plastic and leather, which are the main raw materials of the company, are lower than those since mid October, and with the implementation of the price increase of the company, the pressure on the cost side is expected to be gradually relieved. In the medium and long term, as the leading seat enterprise in China, the company has gradually expanded its business from office home to Pan home through a series of acquisitions and mergers since 2018. At present, its main business includes office home, software home and customized home. With the development of Dr. kitchen, its own brand nouhaus and the promotion of Lo China and Chinese e-commerce, Superimposed on this increase in the purchase of Yongyu home shares, the future development can be expected.
Investment suggestions:
With the expansion of the company's business territory, sufficient orders for office and home furnishings on hand and the continuous promotion of software and customized home furnishings, the contribution of this transaction to the company's future performance is temporarily ignored, and the previous profit forecast is maintained. It is estimated that the company's operating revenue in 21-23 years will be 5.436/63.81/7.288 billion yuan and EPS will be 3.31/4.11/5.02 yuan respectively, Corresponding to the closing price of 41.59 yuan / share on February 28, 2022 before the suspension, PE was 13 / 10 / 8 times respectively, maintaining the "buy" rating.
Risk tips
The demand for office chairs is less than expected; Sofa demand is less than expected; The development of cross-border e-commerce is less than expected; The risk of intensified industry competition; Risk of sharp rise in raw material prices; Exchange rate fluctuation risk.
