\u3000\u3 Shengda Resources Co.Ltd(000603) 816 Jason Furniture (Hangzhou) Co.Ltd(603816) )
Event overview
Jason Furniture (Hangzhou) Co.Ltd(603816) release the annual report of 2021 and the first quarter report of 2022:
In 2021, the company realized a revenue of 18.342 billion yuan, a year-on-year increase of + 44.81%; The net profit attributable to the parent company was 1.664 billion yuan, a year-on-year increase of + 96.87%. By quarter, Q4’s operating revenue in a single quarter was 5.117 billion yuan, a year-on-year increase of + 24.16%; The net profit attributable to the parent company was 427 million yuan, a year-on-year increase of + 359.61%. In Q4, the company’s revenue maintained a steady growth in the single quarter, while the profit side was affected by the low base caused by goodwill impairment in the same period of last year, and the growth rate was significantly higher than the revenue. In terms of cash flow, the net cash flow from operating activities in 2021 was 2.041 billion yuan, with a year-on-year increase of – 6.41%. Among them, the net cash flow from operating activities in Q4 was 1.060 billion yuan, with a year-on-year decrease of – 1.20%, mainly due to the impact of the high base in the same period of last year.
In 2022q1, the company realized a revenue of 4.54 billion yuan, a year-on-year increase of + 20.05%; The net profit attributable to the parent company was 443 million yuan, a year-on-year increase of + 15.11%. In the case of repeated outbreaks outside China, the company’s Q1 performance still maintained good growth. In terms of cash flow, the net cash flow generated from the company’s operating activities in 2022q1 was – 530 million yuan, which changed from positive to negative year-on-year, mainly due to the large amount of advance receipts caused by the company’s promotion at the end of the previous year, the delivery to 22q1 and the increase of the company’s procurement expenditure. In addition, the company plans to increase 3 shares for every 10 shares to all shareholders and distribute a cash dividend of RMB 13.20 (including tax).
Analysis and judgment:
Revenue side: the core business maintained high growth, and the growth rate of overseas business was slightly higher than that of domestic business.
In terms of products, in 2021, the company’s sofa, bed products, integrated products, customized, mahogany furniture and software use service business achieved revenue of RMB 9.267 billion, 33.38 billion, 31.40 billion, 660 million, 126 million and 930 million respectively, with a year-on-year increase of + 44.51%, + 42.75%, + 41.13%, + 44.80%, + 11.77% and + 48.65% respectively. The main businesses such as sofa, bed products, integrated products and customized furniture maintained high growth. The company continues to build stronger product power, improve the high, medium and low product matrix, and continue to promote the integrated design, R & D and sales of “software + customization”, so as to provide consumers with a unified bag carrying scheme and further enhance their market competitiveness.
In terms of regions, the company’s domestic and overseas sales in 2021 were 10.712 billion yuan and 6.918 billion yuan respectively, with a year-on-year increase of + 40.05% and + 48.68% respectively. The income at home and abroad increased steadily. Among them, the income growth of overseas business was slightly faster than that of domestic business. Domestic businesses continue to promote the big home strategy, create the normalization of integrated products of guest dining and sleeping space, and continuously improve the competitiveness of products; The overseas business adheres to the key customer strategy, and the product end adheres to the up-down exploration to meet the needs of different consumption levels.
In terms of sub channels, the company adheres to the 1 + N + X channel strategy and speeds up the integration of large store layout. The X channel continues to explore. In 2021, the company’s total stores decreased by 235 to 6456, including 277 to 6304 distribution stores and 42 to 152 direct sales stores. The total number of stores has declined. We expect that it is mainly related to the company’s increasing promotion of the optimization and upgrading of single stores to integrated large stores. In addition, in terms of store management, the company invested resources finely through the regional retail center, and gave the terminal the right to make flexible decisions, making the marketing method more flexible; At the same time, build an information system for stores, standardize warehousing, logistics and distribution, and gradually transform from manufacturing to retail household enterprises.
Profit side: the profitability of 22q1 declined, and the expense rate was well controlled during the period.
In terms of profitability, in 2021, the company’s gross profit margin and net profit margin were 28.87% and 9.27% respectively, with a year-on-year ratio of -6.34pct and +2.43pct respectively. Among them, the gross profit margin and net profit margin in Q4 were 28.92% and 8.63% respectively, with a year-on-year ratio of -6.76pct and +13.27pct respectively. The gross profit margin in Q4 declined, mainly because the transportation and handling expenses were adjusted to the cost account of main business according to the new accounting standards; The net interest rate increased significantly year-on-year, mainly due to the relatively low base due to the impairment of goodwill in the same period of last year. In terms of business, in 2021, the gross profit margins of the company’s sofa, bed products, integrated products, customization, mahogany furniture and software use services were 29.54%, 33.22%, 24.81%, 32.43%, 29.69% and 86.56% respectively, with a year-on-year increase of -3.02pct, -2.38pct, + 0.58pct, + 3.33pct, + 8.06pct and + 1.30pct respectively; By region, the gross profit margins of domestic and overseas businesses in 2021 were 34.50% and 18.14% respectively, with a year-on-year decrease of -1.21pct and + 0.97pct respectively. The gross profit margin and net profit margin of 2022q1 company were 29.85% and 10.09% respectively, with a year-on-year decline of -3.17pct and -0.07pct respectively. We expect that the decline in the proportion of domestic businesses with relatively high profitability is mainly caused by the epidemic.
In terms of period expense rate, the company’s period expense rate in 2021 was 18.57%, with a year-on-year rate of -6.14pct, of which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 14.74%, 1.79%, 1.65% and 0.39% respectively, with a year-on-year rate of -4.95pct, -0.56pct, -0.02pct and -0.54pct respectively. In 2021q4, the company’s expense rate during the single quarter was 21.20%, with a year-on-year rate of -6.31pct, of which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 16.52%, 1.34%, 2.10% and 1.24% respectively, with a year-on-year rate of -6.17pct, -0.08pct, + 0.08pct and -0.14pct. In 2022q1, the company’s expense rate during the single quarter was 18.33%, with a year-on-year rate of -2.97 PCT, of which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 14.66%, 1.73%, 1.65% and 0.28% respectively, with a year-on-year rate of -3.34 PCT, -0.22 PCT, + 0.16 PCT and + 0.44 PCT. During the period, the cost rate was well controlled.
Investment advice
Jason Furniture (Hangzhou) Co.Ltd(603816) is a leader in the soft furniture industry, and continues to be optimistic about the promotion of the company’s big home development strategy and the accelerated improvement of industry concentration. Considering the repeated epidemic and other impacts, the previous profit forecast was lowered, and the company’s revenue in 20222023 was reduced from 22.225/26.743 billion yuan to 22.177/26.657 billion yuan respectively; From 2022 to 2023, EPS was lowered from 3.38/4.15 yuan to 3.17/3.85 yuan respectively. It is estimated that the company’s revenue and EPS in 2024 will be 31.731 billion yuan and 4.64 yuan respectively, corresponding to the closing price of 58.06 yuan / share on April 21, 2022 and 18 / 15 / 13 times of PE respectively, maintaining the “buy” rating.
Risk tips
Risk of continued maritime tension; Changes in the international trade environment; Downstream demand is lower than expected; Risk of substantial price increase of raw materials; Risk of large fluctuation of exchange rate; The short-term epidemic has repeatedly affected.
