Fujia shares (603219)
Key investment points
China's well-known ODM suppliers of cleaning small household appliances such as vacuum cleaners have achieved steady growth
Founded in 2002, the company is mainly engaged in intelligent cleaning small household appliances such as vacuum cleaner, floor sweeping Siasun Robot&Automation Co.Ltd(300024) and parts such as brushless motor. After two decades of deep cultivation in the field of vacuum cleaners, with a complete range of products and excellent product quality, the company has become one of the top ten vacuum cleaner export enterprises in China (more than 80% are sold overseas). Its products are sold to more than 30 countries and regions in North America, Europe, Asia and Oceania. It is an ODM supplier of cleaning small household appliances such as well-known vacuum cleaners in China. The company's revenue increased from 973 million yuan in 2017 to 2.601 billion yuan in 2021, with a CAGR of 27.86%. The corresponding attributable net profit also increased from 115 million yuan to 232 million yuan, with a CAGR of 19.19%. The performance increased steadily.
Deeply bind JS global life and grow together with shark brand
JS global life ranks sixth among the global small household electrical appliance enterprises and third among the enterprises dominated by small household electrical appliances. Its vacuum cleaner products rank first in both the United States and the United Kingdom. The company is the largest supplier of JS global life. JS has contributed more than 80% of the company's revenue in recent years, with high customer concentration. The company has 16 years of cooperation with shark (shark, whose parent company is JS) brand. The cooperation between the two sides is stable and highly viscous. The company deeply bound JS global life and signed an open-ended contract. As JS global life expands the non American market, the company will grow together with shark brand.
Vacuum cleaners in the world are growing steadily, and there is much room for China to improve its penetration
According to Euromonitor's data, the global vacuum cleaner sales increased from 113 million in 2014 to 148 million in 2021, with a CAGR of 3.95%. Thanks to the covid-19 epidemic, residents around the world have increased demand for indoor clean environment, and the global vacuum cleaner market is expected to maintain steady growth. In 2019, the penetration rate of vacuum cleaners in China was only 17.5%, which was far lower than the penetration rate of more than 90% in western developed countries. The number of vacuum cleaners per 100 households in Chinese Mainland was only 12, which was far lower than the number of more than 90 in developed countries such as Europe, America, Japan and South Korea. Therefore, there is still much room for improvement in China's vacuum cleaner industry in terms of penetration and ownership. Sullivan predicts that the sales volume of China's vacuum suction market will increase from 22.62 billion yuan in 2020 to 38.05 billion yuan in 2025, with a compound growth rate of 11% in the next few years. The company is expected to benefit from the steady growth of markets outside China.
Short term: tariff exemption and exchange rate depreciation are expected to improve the profit valuation. In recent years, Sino US trade frictions have continued. In recent years, tariff fluctuations in the United States have affected the sales price of the company's products, and then the impact on the net profit is more than 10%. Under the inflationary pressure of the United States and China, on March 25, 2022, the United States re exempted 352 tariffs on goods imported from China, which is applicable to goods imported from China between October 12, 2021 and December 31, 2022. The company's products are also included in the exemption list. At the same time, due to the impact of the epidemic on China's economy, the spot exchange rate of RMB also tends to depreciate, which is conducive to reducing the exchange losses of the company. Tariff exemption and devaluation of RMB exchange rate: 1) on the one hand, it can reduce the sales price of the company's products and improve the sales volume of the company's products; 2) On the other hand, it is expected to improve the company's profitability and play a positive role in improving the company's net profit; 3) It helps to improve the valuation of industries and companies.
Long term: synchronous expansion of new production capacity / new products / new regions / new customers
The company's goal is to become the "global leader in high-quality clean small household appliances industry", and has made some layout for this purpose: 1) capacity improvement: from 2018 to 2021, the annual capacity of the company's clean small household appliances will be 368.37/384.38/448.45/6 million units respectively, and the capacity utilization rate has been at a high level. The company has raised funds to add capacity in Ningbo and Vietnam, and the capacity will be increased to 8 million units / year within three years; 2) Product expansion: the company attaches importance to R & D investment and constantly introduces new products. After several years of development, the high-efficiency separation wireless lithium electric vacuum cleaner launched in 2017 accounted for 65.42% of the revenue in 2021, becoming the largest product of the company; In 2019 / 2020, multifunctional wireless mop and intelligent floor sweeping Siasun Robot&Automation Co.Ltd(300024) , respectively, will be launched. In addition, the floor washing machine is planned to be launched in 2022, and the new products are expected to relay and become a new performance growth point of the company. 3) Regional expansion: join hands with JS global life to jointly expand the non American market, especially the European market, which is growing rapidly. At the same time, we have strengthened the development of the Chinese market, and the proportion of sales and revenue in the Chinese market has increased year by year; 4) Customer development: while working closely with JS, actively explore other customers, such as Electrolux, Bissell, Stanley Agriculture Group Co.Ltd(002588) Baide, G tech and other international old vacuum cleaner brand manufacturers, as well as Chinese emerging vacuum cleaner brands such as Micah, Shunzao, Haier, Zhejiang Supor Co.Ltd(002032) , puppy and so on. In recent years, the revenue share of JS global life has decreased from 92.66% in 2018 to 83.52% in 2021. The decline in customer concentration is conducive to the company's risk reduction.
Profit forecast
The company is deeply bound with JS global life and benefits from its global expansion. In the short term, the company benefited from the increase of profits and valuation brought by tariff exemption and RMB exchange rate depreciation, and in the medium and long term, the company benefited from the expansion of production capacity, product expansion, customer development, regional expansion and so on. It is predicted that the net profit of the company from 2022 to 2024 will be RMB 289 million, RMB 378 million and RMB 500 million respectively, and the corresponding PE of the current stock price will be 26, 20 and 15 times respectively. It will be covered for the first time and given the "recommended" investment rating.
Risk tips
Sino US trade friction, the risk of tariff fluctuation, the risk of high customer concentration, the risk of lower than expected expansion of new production capacity / new products / new customers / new regions, the risk of exchange rate fluctuation, the risk of large fluctuations in raw material prices, the risk of macroeconomic downturn, the risk of repeated epidemics, etc.
