\u3000\u3 Shengda Resources Co.Ltd(000603) 661 Henglin Home Furnishings Co.Ltd(603661) )
Event overview
Henglin Home Furnishings Co.Ltd(603661) release the annual report of 2021 and the first quarter report of 2022:
In 2021, the company achieved a revenue of 5.778 billion yuan, a year-on-year increase of + 21.81%; The net profit attributable to the parent company was 338 million yuan, a year-on-year increase of – 7.05%. Quarter by quarter, the operating revenue of Q4 in a single quarter was 1.807 billion yuan, a year-on-year increase of + 19.07%; The net profit attributable to the parent company was 72 million yuan, a year-on-year increase of + 18.05%. In the case of repeated epidemics, rising raw material prices and tight shipping capacity, the company’s performance in the single quarter of 2021q4 still maintained a good growth, mainly due to the company’s inclusion of Dr. kitchen in the consolidated statements in July 2021 and the steady development of the company’s original business. In terms of cash flow, the net cash flow from operating activities in 2021 was 96 million yuan, with a year-on-year increase of – 86.06%. Among them, the net cash flow from Q4 operating activities was 166 million yuan, with a year-on-year decrease of – 61.17%, mainly due to the payment of bank acceptance bills and materials in the fourth quarter of 2021.
In 2022q1, the company realized an operating revenue of 1.401 billion yuan, a year-on-year increase of + 35.66%; The net profit attributable to the parent company was 73 million yuan, with a year-on-year increase of + 9.13%. The high growth on the revenue side was mainly due to the increase in the sales revenue of panel furniture business. The profit side was affected by the rise of raw material prices and the change of business structure, and the year-on-year growth was less than that on the revenue side. In terms of cash flow, the net cash flow from the operating activities of 2022q1 company was -83 million yuan, an increase of 181 million yuan year-on-year, mainly due to the increase in the payment of materials payable and year-end wages and bonuses in the same period of last year.
In addition, the company plans to increase 4 shares for every 10 shares and distribute a cash dividend of 10.00 yuan (including tax).
Analysis and judgment:
Revenue side: promote the big home strategy and expand the field of customized furniture.
By product, in 2021, the company’s office chair, sofa, massage chair and system office business achieved revenue of RMB 2.235 billion, RMB 1.173 billion, RMB 310 million and RMB 752 million respectively, with a year-on-year increase of – 3.16%, + 31.14%, + 114.69% and – 6.88% respectively. The traditional office chair business and system office business decreased slightly compared with the same period, and the sofa business and massage chair business increased significantly. In addition, under the framework of big home strategy, the company expanded customized furniture business by purchasing 100% equity of Dr. kitchen in 2021 and added panel furniture business. In 2021, the revenue of panel furniture business was RMB 900 million, of which the revenue of Dr. kitchen in the consolidated statement period was RMB 614 million, accounting for 10.62% of the company’s revenue, and the consolidated net profit was RMB 66 million, accounting for 19.82% of the company’s net profit.
By region, the company’s overseas and domestic revenue in 2021 were 4.442 billion yuan and 1.264 billion yuan respectively, with a year-on-year increase of + 8.27% and + 111.51% respectively. The overseas business benefited from the development of the company’s international market and the growth of overseas e-commerce business, which maintained a steady growth as a whole. The domestic revenue increased significantly with the consolidation of Dr. chef, and its contribution to the company’s overall revenue increased rapidly.
By sales mode, the company’s OEM, ODM mode and OBM mode achieved revenue of RMB 3.665 billion and 2.041 billion respectively in 2021, with a year-on-year increase of + 14.27% and + 36.70% respectively. Traditional OEM and ODM businesses have developed steadily, while OBM business has developed rapidly with the development of the company’s own brands “nouhaus” and “Lo”.
Profit side: the profitability declined year-on-year, and the sales expense rate decreased significantly.
In terms of profitability, the gross profit margin and net profit margin of the company in 2021 were 22.50% and 5.78% respectively, with a year-on-year increase of -6.99pct and -2.20pct respectively, of which the gross profit margin and net profit margin in the single quarter of 2021q4 were 21.83% and 3.76% respectively, with a year-on-year decrease of -4.95pct and -0.68pct respectively. Among them, the gross profit margin decreased significantly, which was mainly caused by the rise in the price of bulk commodity raw materials. According to the business, the company’s office chair, sofa, massage chair The gross profit margin of the system office was 20.57%, 17.53%, 47.16% and 28.75% respectively, with a year-on-year increase of -10.19pct, -3.99pct, + 2.63pct and + 0.62pct respectively. The gross profit margin of the new business panel furniture was 24.64%, which was higher than that of the traditional office chairs, sofas and other businesses; The decrease of net profit margin is lower than the gross profit margin, which is mainly due to the good period expense rate control of the company. In 2021, the period expense rate of the company was 16.40%, with a year-on-year rate of -4.75pct, of which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 6.52%, 4.88%, 3.49% and 1.51% respectively, with a year-on-year rate of -5.08pct, + 0.20pct, + 0.54pct and -0.42pct respectively. The sales expense rate decreased significantly, Mainly due to the decrease of the company’s sales platform expenses and sales commission.
In the single quarter of 2022q1, the gross profit margin and net profit margin of the company were 21.30% and 5.13% respectively, with a year-on-year decrease of -6.05pct and -1.36pct respectively. The decline in profitability is expected to be mainly affected by the high price of raw materials. In terms of period expense rate, the period expense rate of 2022q1 company was 17.85%, with a year-on-year rate of -4.18pct, of which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 7.30%, 4.96%, 3.02% and 2.56% respectively, with a year-on-year rate of -3.33pct, -1.36pct, -0.58pct and + 1.09pct respectively. The period expense rate was well controlled, and the sales expense rate continued to decline year-on-year.
Investment advice
With the expansion of the company’s business territory, sufficient orders for office and home furnishings on hand and the continuous promotion of software and customized home furnishings business, considering the great contribution of Dr. Chu’s consolidated statement and the temporary disregard of the contribution of Yongyu home equity purchase to the company’s future performance, the company adjusted its previous profit forecast. From 2022 to 2023, the company’s operating revenue increased from 6.381/7.288 billion yuan to 6.970/7.963 billion yuan respectively, and EPS increased from 4.11/5.02 yuan to 4.18/5.14 yuan respectively, It is estimated that the company’s revenue and EPS in 2024 will be 9.021 billion yuan and 6.30 yuan respectively, corresponding to the closing price of 33.50 yuan / share on April 29, 2022, and PE will be 8 / 7 / 5 times respectively, maintaining the “buy” rating.
Risk tips
The demand for office chairs is less than expected; Sofa demand is less than expected; The development of cross-border e-commerce is less than expected; The risk of intensified industry competition; Risk of sharp rise in raw material prices; Exchange rate fluctuation risk; Short term epidemic impact.
