\u3000\u3000 Jason Furniture (Hangzhou) Co.Ltd(603816) (603816)
Key investment points
Event: the company released the annual performance forecast for 2021. In 2021, the net profit attributable to the parent company was 1.65 billion yuan to 1.73 billion yuan, a year-on-year increase of 95% to 105%, and a year-on-year increase of 24-30% after excluding the impact of goodwill impairment in the same period; The net profit attributable to the parent company after deducting non-profit was RMB 1.42 billion to RMB 1.5 billion, with a year-on-year increase of 140% to 154%. After excluding the impact of goodwill impairment in the same period, it increased by 32-40% year-on-year, and the performance grew steadily.
The operation is stable throughout the year, and the advantages of channel management are expected to continue to show. Throughout the year, the company’s monthly order growth fluctuated slightly and its operation was stable, mainly due to the gradual maturity of the organizational structure reform promoted by the company since 2018. The regional retail center can timely collect terminal feedback and timely provide accurate marketing and training support to dealers when the external environment changes. In the future, the company’s channel management advantages are expected to continue to show and help the company operate steadily and well.
The export organization structure is reorganized, and the integration of production, research and marketing opens up profit space. In 2021, the company integrated the export management system. At present, the export has an independent R & D department, which is closely combined with the front-end sales and back-end supply chain, which can respond to customer needs more quickly, accelerate the pace of new product launch and improve market competitiveness. After the improvement of internal management efficiency, profitability is also expected to be improved. The company plans to build a production base in Monterrey, Mexico. It is expected to start construction in the first half of 2022. The first phase of the project will be completed and put into operation in the middle of 2023. When the overall project reaches the goal, it is expected to realize an operating revenue of about 3 billion yuan. The layout of the self built base in Mexico will help to improve supply efficiency, improve customer satisfaction, reduce the pressure of tariffs on profit margin, and provide a solid guarantee for the improvement of the company’s market share in North America.
Take the lead in upgrading and transforming to large stores, and further enhance the retail capacity. The company prospectively arranged the sales capacity of large household appliances in all categories. In terms of channels, the company continued to optimize the store status, and promoted the transformation and upgrading of single category stores to integrated stores and multi category stores. In the first three quarters, the number of large stores and comprehensive stores reached 1700, accounting for more than 30%. From the perspective of large stores that have opened at present, the customer unit price and conversion rate under the large store mode have been significantly improved, and the profitability is better. With the one-stop change in the habits of end consumers, the company’s retail barriers continue to rise.
Three high potential categories drive growth, with sufficient medium and long-term market space. In the first three quarters, the growth of the company’s categories blossomed at many points, the middle and low-end Tianxi and high-end Natuzzi series performed brilliantly, and the sofa price belt was further enriched to fully meet the needs of consumers at different levels; The functional sofa category benefits from the improvement of industry penetration, and the product power is gradually recognized by consumers. Customized furniture maintains a higher growth rate than the overall revenue. It is expected that with the gradual climbing of customized production capacity in Hangzhou, the resolution of production capacity bottlenecks, the increase in the proportion of front-end integrated stores and the enhancement of store operation capacity, the customer acquisition and transformation capacity of customized business is expected to be optimized. Looking forward to the follow-up, the growth space of functional sofa, bed and customized furniture is still sufficient, which is expected to drive the growth center upward.
Profit forecast and investment suggestions. It is estimated that the EPS from 2021 to 2023 will be 2.70 yuan, 3.32 yuan and 4.06 yuan respectively, and the corresponding PE will be 27 times, 22 times and 18 times respectively. Considering the outstanding long-term competitive strength of the company, the “buy” rating is maintained.
Risk tips: the risk of sharp fluctuations in the price of raw materials, the risk of repeated global epidemics, the risk that the progress of new production capacity is less than expected, and the risk that the channel expansion is less than expected.
