\u3000\u3 Shengda Resources Co.Ltd(000603) Guanghui Logistics Co.Ltd(600603) 600)
Event: Ue Furniture Co.Ltd(603600) released the 2021 annual report and the 2022 first quarter report. In 2021, the company realized an operating revenue of 4.659 billion yuan, a year-on-year increase of 35.67%; The net profit attributable to the parent company was 181 million yuan, a year-on-year decrease of 22.01%; The net profit attributable to the parent company after deduction was 139 million yuan, a year-on-year decrease of 29.73%. In 2021q4, the company realized an operating revenue of 1.203 billion yuan, a year-on-year increase of 8.27%; The net profit attributable to the parent company was 21 million yuan, a year-on-year decrease of 18.28%; The net profit attributable to the parent company after deducting non-profit was 04 million yuan, a year-on-year decrease of 68.88%.
In addition, in the first quarter of 2022, the company achieved an operating revenue of 1.008 billion yuan, a year-on-year decrease of 5.46%; The net profit attributable to the parent company was 47 million yuan, a year-on-year decrease of 13.55%; The net profit attributable to the parent company after deduction was 44 million yuan, with a year-on-year increase of 2.96%.
The leading market share of office chairs increased steadily, and the main business maintained rapid growth
In the face of external pressures such as RMB appreciation, poor shipping and the impact of the epidemic in Vietnam base in the past 21 years, the company vigorously promoted the “top one and two” market strategy, effectively increased its share in the mainstream market and mainstream customers by virtue of its differentiated advantages such as new product development capacity and Vietnamese production capacity, and achieved rapid growth in revenue. The company has developed a number of series of KD (detachable) structural products to reduce product volume and logistics costs. It has established long-term and stable cooperative relations with world-famous E-sports brands Razer, Corsair and respawn, focusing on the development of home office chairs and other products for retail channels. The business of large retailers has grown rapidly and its share in large customers has continued to increase.
By category, in 2021, the company’s office chair, sofa, massage chair body, leisure chair and functional seat accessories achieved revenue of RMB 3.136/9.67/4.03/0.48/0.20 billion respectively, with a year-on-year increase of + 32.96 / + 47.07 / + 37.97 / + 15.79 / – 35.21%. In 21 years, the sales volume of office chairs reached 10.398 million units, with a year-on-year increase of 27.04%; Sofa sales reached 1211500 units, a year-on-year increase of 65.83%. The company will continue to optimize the product structure, eliminate the long tail SPU and promote standardized design to strengthen the scale effect.
Domestic and foreign sales have made joint efforts, and the construction of production capacity has been steadily promoted
In terms of regions, the domestic sales revenue in 2021 was 917 million yuan, with a year-on-year increase of 26.11%. The company continued to expand Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channels, the number of dealers and direct major customers increased significantly, focused on brand construction, significantly improved brand awareness, and the sales of independent brand business outside China increased by 70.36% over the same period. The company will further accelerate the development of independent brands in the Chinese market. The income from export sales reached 3.708 billion yuan, a year-on-year increase of 38.18%, mainly due to the further release of home office demand driven by overseas epidemic.
In terms of production capacity, the company has steadily promoted the construction of China’s production capacity, and the annual output of 2.5 million sets of ergonomic healthy seats has been gradually put into operation, and the level of automatic production and digital management has been improved. In Vietnam, the second phase of Vietnam production base expansion project has been gradually put into operation. With the zero tariff advantage of Vietnam’s office chairs exported to the United States, it is expected to help quickly increase the market share of the United States. In Romania, the company actively promotes the construction of production base, which is expected to help accelerate the development of European and other overseas markets. At the same time, the company continues to optimize the global production capacity layout, promote lean production and local supply chain construction, and will continue to promote the self-made and vertical integration of key parts, so as to quickly form effective production capacity and stabilize the supply chain, which is expected to contribute to the coordinated improvement of sales, production capacity and operation efficiency.
Profitability was under pressure in the short term, and the gross profit margin of 22q1 rebounded month on month
In terms of profitability, the company’s comprehensive gross profit margin in 21 years was 14.64%, down 4.54 PCT year-on-year, mainly due to the rise in the price of raw materials, the appreciation of RMB and the rise in sea freight. In 2022q1, the company’s comprehensive gross profit margin was 16.65%, with a year-on-year increase of 1.69pct and a month on month increase of 2.18pct. Under the comprehensive influence, the net interest rate of the company in 21 years was 3.89%, a year-on-year decrease of 2.88pct. In 2022q1, the company’s net profit margin was 4.69%, a year-on-year decrease of 0.44pct and a month on month increase of 2.95pct. In terms of period expenses, the expense rate during the 21-year period was 10.92%, with a year-on-year decrease of 0.85pct, and the expense rates of sales / management / R & D / finance were 3.46/3.14/3.42/0.89%, with a year-on-year increase of + 0.58 / – 0.07 / + 0.06 / – 1.42pct respectively. The increase of sales expenses was mainly due to the growth of cross-border e-commerce business. During 2022q1, the expense rate of the company was 1.97%, with a year-on-year increase of 1.14pct.
Investment suggestion: the company continues to develop new customers, maintain the stable development of export business, and actively explore the construction of its own brand for domestic sales. We estimate that the operating revenue of Ue Furniture Co.Ltd(603600) from 2022 to 2024 will be RMB 4.665 billion, RMB 5.074 billion and RMB 5.725 billion, with a year-on-year increase of 0.14%, 8.77% and 12.83%; The net profit attributable to the parent company was 236 million yuan, 278 million yuan and 344 million yuan, with a year-on-year increase of 30.35%, 17.47% and 24.02%. The corresponding PE was 9.8x, 8.4x and 6.8x, and the investment rating of Buy-A was given.
Risk warning: raw material price fluctuation risk; Exchange rate fluctuation risk; Risk of overseas demand decline; Risk of continuous disturbance of the epidemic; Risks of continuous shortage of shipping resources, etc.
