\u3000\u3 China Vanke Co.Ltd(000002) 293 Luolai Lifestyle Technology Co.Ltd(002293) )
Luolai is the leader of China’s home textile industry. At present, its undervalued and high dividend attribute highlights its investment value. In terms of fundamentals, the characteristics of the company’s main home textile industry (not obvious seasonality, mainly futures) make the company’s income performance less affected by the scattered outbreak of the epidemic. Lexington’s home business benefits from the continued boom of the US real estate market.
Home textile dual brand layout, good performance in ordering and online data, and small disturbance of epidemic situation. The company has two high-quality home textile brands, Luolai + LoVo. The home textile business accounts for 80% of the company’s revenue. The company also has Lexington American high-end furniture brand. Luolai brand positioning is mainly based on offline channels, and the growth rate is considerable under the background of high-end consumption toughness; Lovo lechuang brand is an e-commerce brand founded by the company. At present, the brand is mature and independent, focusing on the cost-effective market. In the first three quarters of 2021, the company achieved an operating revenue of 3.999 billion yuan, with a year-on-year increase of 22.77%. In the third quarter alone, the main home textile industry still achieved double-digit growth despite the impact of the epidemic, especially the efficiency of direct channel stores increased by more than 20%. The seasonality of home textile products is not obvious, and the futures based model is also less affected by the epidemic. The company’s order data for 22 years is good. At the same time, the company has continued to develop online since the epidemic, and has maintained a good growth rate online (magic mirror data shows that the growth rate online in January and February is more than 40%). We believe that under the current scattered epidemic, especially the epidemic in first tier cities, the company’s revenue performance is less disturbed.
The furniture business brand is scarce and develops steadily, and the US real estate data is still booming. Lexington acquired by the company is a well-known American furniture brand. The home business accounts for about 20% of the company’s revenue and has been developing steadily since the acquisition. Since the outbreak in 2020, the US real estate market has maintained a prosperous development trend, especially the high prosperity of the villa housing market, which has created strong development conditions for the development of high-end home furnishings. We tracked the data of existing home sales in the United States since 2022. The annualized data of existing home sales in January and February were 6.49/6.02 million units respectively, which remained at the highest level in recent years. We think Lexington’s own card position is excellent. The company’s management output has improved its profitability and operation level in recent years, and has become an important force for the company’s stable performance.
The company promoted fine management, made concerted efforts on and off the line, and improved its operation level. On the online side, the company continues to expand the self broadcast business of traditional platforms and emerging channels, bringing incremental sales. Offline, the company continues to open direct stores in the high-quality business district of high-speed city, maintains a net number of stores throughout the year, gives more refined guidance and more favorable support to franchise stores, helps the company win better channel resources and enables dealers to grow at the same time. In the future, the company’s main home textile industry will continue to benefit from the trend of channel upgrading and brand concentration.
Equity incentive was granted for the first time, demonstrating development confidence. On September 17, 2021, the company completed the first grant of the restricted stock incentive plan in 2021 and granted 11.75 million restricted shares to 146 incentive objects who met the grant conditions at a price of 5.76 yuan per share. The first performance appraisal target granted is: Based on the performance in 2020, the growth of net profit or operating revenue in 2021 / 2022 / 2023 shall not be less than 10% / 21% / 33%, and the annual revenue and profit shall be positive growth. It shows the management’s confidence in the development of the company.
Profit forecast and investment rating: in the main home textile industry, the company has different positioning of dual brands and Wuxi Online Offline Communication Information Technology Co.Ltd(300959) refined operation; Overseas Lexington brands are of high quality and benefit from the high prosperity of the industry. Maintain the company’s profit forecast, that is, the net profit from 2021 to 2023 is 718 million yuan, 835 million yuan and 981 million yuan. At present, the corresponding PE share price is 14.33, 12.33 and 10.49 times respectively. The company’s cash flow is in good condition. The cash dividend rate reached 100% in the first three quarters of 21 years. The attribute of undervalued value and high dividend is obvious, and the “recommended” rating is maintained.
Risk tip: the competition among various channels in the industry is intensified, the inventory is not digested in time, and the duration of the epidemic is longer than expected.
