\u3000\u3 China Vanke Co.Ltd(000002) 572 Suofeiya Home Collection Co.Ltd(002572) )
Event:
The company released the annual report of 2021. During the reporting period, the revenue / net profit attributable to the parent company / net profit deducted from non attributable to the parent company were 10.407123/32 billion yuan respectively, with a year-on-year increase of + 24.6% / – 89.7% / – 97.0% respectively; 2021q4 achieved revenue / net profit attributable to parent company / deduction of net profit not attributable to parent company of RMB 3.163 / – 726 / – 759 billion, respectively – 2.9% / – 246.7% / – 263% year-on-year.
Comments:
Retail driven revenue exceeded 10 billion, and the project dragged down the profit performance: by product, the wardrobe achieved a revenue of 8.27 billion yuan, a year-on-year increase of + 23.4%, accounting for 79.5% of the revenue, a year-on-year decrease of -0.77 PCTs; The income of cabinets reached 1.42 billion yuan, up + 17.3% year-on-year, accounting for 13.6%, up -0.86pcts year-on-year; The revenue of wooden doors reached 458 million yuan, a year-on-year increase of + 56.9%, accounting for 4.4%, a year-on-year increase of + 0.91 PCTs.
In terms of sub channels, the revenue from dealer channels was 8.36 billion yuan, a year-on-year increase of + 28%, of which the overall packaging revenue brought by the decoration enterprises contracted at the dealer cooperation and company level was 529 million yuan, with a year-on-year growth rate of 613% in 2020; The revenue from direct channels was 342 million yuan, a year-on-year increase of + 36.9%; The revenue of bulk channels was 1.6 billion yuan, a year-on-year increase of + 6.6%. 4q2021, the company achieved a revenue of 3.16 billion yuan, a year-on-year increase of – 2.9%, mainly due to the year-on-year decrease in engineering business volume. In 2021, the company realized a net profit of 123 million yuan, a year-on-year increase of – 89.7%, mainly due to the overdue project funds of Evergrande and the provision of 909 million yuan of bad debt losses (80% of the provision).
The price of raw materials increased, the efficiency decreased and the gross profit margin was reduced. The investment in marketing and R & D increased and the expense rate increased: the gross profit margin of the company was 33.2% in 2021, with a year-on-year increase of -3.4pcts. The reasons for the decline: 1) in 2021, the company increased the sales of kangchun board. At the end of September, customers and orders accounted for nearly 90% of kangchun board, and the price of kangchun board was higher than E0 level. However, in order to speed up the promotion of kangchun board, the company launched a large number of special price varieties, The price increase is lower than that of raw materials; 2) Product SKUs have increased significantly in a short time, and the production efficiency has been reduced by stages due to the direct marketing and assembly and the operation of Milana. By product, the gross profit margin of wardrobe / cabinet / wooden door is – 4.7 / + 3.6 / + 2.6pcts to 35.7% / 26.3% / 17.1% respectively. In terms of sub channels, the gross profit margin of distribution / direct sales / bulk commodities is – 4 / – 5.3 / – 2.9pcts to 34% / 69.5% / 20.5% respectively.
In 1q2022, the company has reduced the proportion of special designs and colors of kangchun board, and the production efficiency of packaged and milanna will also improve with time. Due to the structural changes of increasing the proportion of retail revenue and reducing the proportion of Engineering revenue, we expect the gross profit margin of the company to improve in 2022.
In terms of period expense rate, it was 20.2% in 2021, with a year-on-year increase of + 0.8pcts, of which the sales expense rate was affected by a large number of recruiters, with a year-on-year increase of + 0.5pcts to 9.7%, and the management expense rate was – 0.3pcts to 7% due to scale effect; The R & D expense ratio increased from + 0.3pcts to 2.8% year-on-year. The increase of the company’s expense rate in 2021 is mainly due to adapting to business development, recruiting a large number of personnel and increasing R & D investment. We believe that this increase of expense rate has laid a good foundation for the company’s future business growth.
All channels, multi brands and all categories to accelerate market share grabbing: we believe that 2021 is a year for Suofeiya Home Collection Co.Ltd(002572) thoroughly straightening out the internal strategy, focusing on the whole customization, and implementing a more strict assessment mechanism for dealers at the channel side, so that the dealer team is more willing to cooperate with the promotion of the whole customization strategy of the company, and accelerate the efforts of the whole packaging channel to seize a new entrance of traffic; On the brand side, Suofeiya Home Collection Co.Ltd(002572) locates the middle and high-end groups. Simi expands from the cabinet to the whole house customization, and locates the light luxury groups who prefer modern style. Huahe locates the high-end groups who love classical Chinese style and solid wood, while mulanna focuses on the young and mass groups. Through brand stratification, different customer groups are locked layer by layer. In terms of categories, it forms an ecological complementary relationship with China’s powerful software and home appliance brands, and constructs seven categories: whole house customization, whole kitchen customization, whole house wooden door, whole house wallboard, whole house furniture, whole house floor and whole house electrical appliances. Implement the concept of whole customization, and realize the whole customization and quotation through the package pricing mode, so as to form the three-dimensional advantages of matching design style, improving decoration efficiency and being close to the people in terms of price, so as to accelerate the market share of small and medium-sized enterprises. We are optimistic about the prospect of Suofeiya Home Collection Co.Ltd(002572) winning the second ten billion journey.
The industry boom is expected to hit the bottom and pick up. The company straightens out its strategy and starts again to maintain the “buy” rating: we expect the company’s EPS to be 1.51/1.86/2.22 yuan from 2022 to 2024, and the current share price corresponding to PE is 13 / 11 / 9 times respectively. According to wind data, since 2013, the median price earnings ratio of TTM in the home sector has been 33 times. At present, the price earnings ratio of TTM in the home sector is 20 times, which is at the bottom of the historical 3.1% quantile. At the same time, according to the statistics of China Index Research Institute, more than 60 urban governments in China began to relax real estate restrictions in the first quarter, which will help the prosperity of the home industry rise and improve the valuation level of the industry. Given that the industry valuation is at the bottom, the industry boom is expected to rise, and the company has good growth prospects after straightening out its strategy. At the same time, the current valuation level is low, so it maintains the “buy” rating.
Risk tip: China’s real estate sales are lower than expected, and the rise of raw material prices is higher than expected.
