\u3000\u3 Shengda Resources Co.Ltd(000603) 818 Qumei Home Furnishings Group Co.Ltd(603818) )
Event: in 2021, the company realized an income of 5.073 billion yuan, an increase of 18.57%, a net profit attributable to the parent company of 178 million yuan, an increase of 71.31%, a deduction of 148 million yuan, an increase of 55.59%, and EPS of 0.31 yuan. 21q4 achieved a revenue of 1.331 billion yuan, a decrease of 3.41% at the same time, and a net profit of -3.474 million yuan. It turned from profit to loss. Affected by the pressure of China’s consumption environment and the depreciation of Norwegian krona, the revenue growth slowed down, the gross profit margin decreased, and the impairment of Evergrande’s credit and assets affected the net profit performance. In 2022q1, the company realized an income of 1.313 billion yuan, an increase of 14.25% at the same time. The net profit attributable to the parent company was 581574 million yuan, a decrease of 5.30% at the same time, and the non net profit deducted was 443497 million yuan, a decrease of 10.63% at the same time. The channels of Chinese business dealers continued to expand, the direct business income achieved double-digit growth, and the contract amount of engineering business increased by more than 300%. However, due to the impact of the Winter Olympic Games, the production was stopped in stages, and the epidemic led to the suspension of logistics, which affected the income performance in March. At present, the epidemic situation in the whole country has been gradually controlled, and the company’s delivery has returned to normal. Ekornes’s global orders grew brightly. Orders in the Chinese market increased by more than 100% at the same time. Europe and North America achieved year-on-year growth. 22q1’s overall revenue increased by 34% and net profit increased by 32%.
Comments:
Qumei’s brand revenue increased and Ekornes’s global business expanded smoothly. In terms of Qumei brand, in 2021, customized furniture, finished furniture, accessories and other achieved revenue of 847 million yuan, 640 million yuan and 275 million yuan, with an increase of 7.90%, – 7.11% and 66.62% respectively. The company’s business in China was weakened by the epidemic, the transformation and upgrading of distribution business, the rapid growth of direct revenue, the rapid expansion of innovative business, the rapid expansion of engineering customers and the creation of new revenue growth points. In terms of Ekornes business, the revenue of stressless, IMG and svane brands in 2021 was 2.376 billion yuan, 612 million yuan and 226 million yuan, with a same increase of 27.34%, 30.80% and 13.49%. Stressless’s category expansion effect showed that the revenue of sofa, electric chair, dining table chair and other soft furniture increased rapidly. Ekornes’s Chinese market expanded rapidly and large orders from large customers jointly promoted the rapid growth of the revenue of various brands.
Net operating expenses and gross profit margin decreased. 1) The increase in the cost of raw materials and the decrease in the cost of shipping to pct.587% in 2027 are mainly due to the increase in the cost of raw materials and the decrease in the cost of shipping to pct.587%. In 2022q1, the gross profit margin of the company decreased by 8.08pct to 35.58%. 2) In 2021, the company’s sales, management, R & D and financial expense rates were 17.28%, 7.15%, 2.00% and 3.91%, with the same increase of -5.81pct, -1.20pct, -0.12pct and -2.15pct. The company’s revenue scale was expanded and the expense control was strengthened. During the period, the expense rate decreased year-on-year. Among them, the sales expense rate decreased significantly due to the adjustment of accounting standards. 3) In 2021, the company accrued 63.93 million yuan of asset impairment loss and credit impairment loss, mainly due to the impairment of accounts receivable and inventory. 4) In 2021, the net cash flow from operating activities decreased by 28.71% to 441 million yuan, mainly due to the increase in raw material procurement, labor costs, freight and other expenses.
The business in China has been continuously optimized and Ekornes business has been continuously promoted. The company further promotes the coordinated development of China business and Ekornes business: China business company continues to optimize the level of dealers, accelerate market sinking and channel expansion, focus on developing direct business with Beijing as the core, improve retail capacity, and accelerate the development of innovative businesses such as B2B engineering business, home decoration business and drainage platform business. Ekornes continues to promote the expansion of new categories such as soft furniture and living room furniture, increase the layout of the Chinese market, continue to develop key customers in downstream channels, and promote revenue growth. Ekornes will deal with the rising cost of raw materials and sea freight by means of price increase and cost control, give full play to the advantages of scale and improve the profit level.
Profit forecast and investment rating: due to the year-on-year decline of the company’s performance affected by the epidemic in 2022q1, we lowered the company’s EPS forecast for 202223 to 0.78/1.06 yuan (the original value was 0.87/1.14 yuan), and added a new forecast of 1.42 yuan in 2024. At present, the stock price corresponds to 12.44 times PE in 22 years. We are optimistic that the company’s income will resume rapid growth, profitability will continue to improve, there is broad growth space for home leaders, and the valuation is at a low level relative to the growth rate of performance, Maintain the “buy” rating.
Risk factors: the improvement of financial expenses is less than expected, the regulation risk of downstream real estate market, the intensification of industry competition, the growth of overseas consumption is lower than expected, etc.
