\u3000\u3 Shengda Resources Co.Ltd(000603) 816 Jason Furniture (Hangzhou) Co.Ltd(603816) )
The growth rate in 2021 is bright. The operating revenue and net profit attributable to parent company CAGR in the past six years are 31% and 22% respectively. The company released its annual report for 2021. In 2021, it realized an operating 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%. If excluding the impact of 484 million yuan of goodwill impairment loss accrued in 2020, the adjusted net profit attributable to the parent company increased by about 25% year-on-year in 2021. The performance growth was mainly driven by domestic and export sales and diversified products. In terms of quarterly revenue, the company’s Q1 / Q2 / Q3 / Q4 revenue increased by 65% / 65% / 41% / 24% respectively in 21 years, showing an overall quarterly growth trend, and the net profit increased by 26% / 44% / 7% / 33% respectively (Q4 excludes the estimation of the impact of goodwill impairment).
The software industry has broad space, and the company’s market share still has great room for improvement. According to the calculation of historical real estate sales, single value of furniture categories and penetration data, we estimate that the factory scale of the software industry will be about 121.3 billion yuan in 2021, and it is expected to maintain a growth trend of 5% ~ 6% in the next three years; Among them, the factory scale of sofa industry is about 57.2 billion yuan and that of bedding industry is about 64.1 billion yuan. In recent years, Jason Furniture (Hangzhou) Co.Ltd(603816) ‘s market share has increased rapidly. The company’s domestic sales accounted for 6.2% in 2021, up from 3.6% in 2015. In the future, with the continuous expansion of the company’s channels and categories, the market share is expected to still have great room for improvement.
Category integration is advancing rapidly, and the multi brand matrix covers more customer groups. According to the main products, the operating revenue of sofas / soft beds and mattresses / supporting products / customized furniture accounted for 51% / 18% / 17% / 4% respectively in 2021, with the growth rate of 45% / 43% / 41% / 45% respectively, and the core categories achieved a bright growth of more than 40%. On the brand side, the company’s own brand revenue accounted for 76% in 2021, with a revenue scale of 13.985 billion yuan, a significant year-on-year increase of 50.7%; At present, the company has eight product series including sofa / mattress / customization, independent light fashion brand “tianxipai”, its own brand “dongfanghui”, and cooperative brand “lazboy” American functional sofa. In 18 years, the company acquired German high-end furniture “rolfbenz”, Italian high-end furniture brand “Natuzzi” and international designer brand kukahome, and constantly improved the brand matrix covering different value belts and customer groups.
Export sales have resumed rapid growth, and domestic sales channels have been upgraded and integrated into large stores with remarkable results. 1) Export sales: the company’s export sales revenue accounted for about 38% in 2021, realizing an export sales revenue of 6.918 billion yuan, with a year-on-year increase of 48.7%. The business operation was optimized through overseas capacity layout, supply chain optimization and localization layout. In terms of product structure, the functional sofa in the North American market is expanding to the middle and low-end series, promoting the expansion to new products such as mattresses; Vietnam’s tariff and manufacturing base construction and related risks are effectively hedged. 2) Domestic sales: in 2021, the domestic sales revenue accounted for about 58%, and the export sales revenue reached 10.712 billion yuan, with a year-on-year increase of 40.0%. The company has started channel reform since 2018, mainly focusing on the digital upgrading of regional retail centers, integrated large stores and stores, forming a 1 + n + X channel playing method. In 2021, the total number of stores in China was 6456, with a year-on-year decrease of 274, Among them, there are 4463 / 152 / 1841 private brand dealerships / Direct stores / other brand dealerships respectively, with changes of – 274 / + 42 / – 3 respectively. The optimization and upgrading from single store to integrated large store significantly improves the customer unit price and store efficiency.
Profit forecast and investment rating: as the leader of China’s software industry, the company’s organizational ability is leading in the industry. It binds its core interests through the incentives of dealers and executives to demonstrate its development confidence. In recent years, we have continued the reform of retail channels, with a clear growth path of product + channel cooperation under the mode of integrating large stores, and attached importance to the improvement of the efficiency of the manufacturing background. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 2.004 billion yuan, 2.477 billion yuan and 3.058 billion yuan respectively, with a year-on-year increase of 20.4%, 23.6% and 23.5% respectively. At present, the (2022 / 4 / 22) share price corresponds to 18.8x PE in 2022, and is rated as “buy” for the first time.
Risk factors: the risk of intensified market competition and the risk of rising raw material prices.
