\u3000\u3000 Jason Furniture (Hangzhou) Co.Ltd(603816) (603816)
Event overview
Jason Furniture (Hangzhou) Co.Ltd(603816) release the announcement of performance increase in 2021: it is estimated that the net profit attributable to the parent company will be RMB 1.650-1.73 billion in 2021, with a year-on-year increase of 95% – 105%; The net profit attributable to the parent company after deduction was RMB 1.420-1.500 billion, with a year-on-year increase of 140% – 154%. Quarterly, it is estimated that the net profit attributable to the parent company in 2021q4 in a single quarter is 413-493 million yuan, and the net profit attributable to the parent company after deduction is 306-386 million yuan, both of which have significantly reversed losses year-on-year, mainly due to the provision for goodwill impairment made by 2020q4 company, resulting in a low base in the same period of last year. The performance growth is in line with expectations.
Analysis and judgment:
High performance, domestic and export market force.
In 2020, due to the impact of the epidemic, the performance of the merged company was lower than expected. Therefore, the company made a total provision for goodwill impairment of 484 million yuan, resulting in a low base in the same period of last year. If the impact of goodwill impairment provision in 2020 is excluded, the net profit attributable to the parent company is expected to increase by 38% – 45% year-on-year in 2021, and the net profit attributable to the parent company after deduction is expected to increase by 51% – 59% year-on-year, and the performance still shows a high growth, It is mainly driven by the company’s domestic and export business and the implementation of the company’s product price increase. In the domestic market, the company continued to promote the big home strategy, increased brand and R & D investment, improved the product matrix, accelerated Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channel integration, and gave full play to scale benefits and channel advantages. In terms of export, the company accurately grasped the market trend, continued to improve the product power, and added a medium and low-end product structure platform. The core categories increased significantly, opening up the growth potential of the categories. In addition, the company actively explored and expanded cross-border e-commerce business, arranged new business in North America, and further strengthened product promotion through product small video, product modeling, live broadcast project and other modes. In addition, in order to cope with the rising price of raw materials, the company raised the price of products many times in 2021. The implementation of the price increase is smooth, which will certainly alleviate the pressure on raw materials.
Accelerate production capacity layout and help long-term development.
The company has recently accelerated its production capacity layout, further enhanced its industry competitiveness and helped the company’s long-term development. 1) In the Chinese market, the company obtained 105200 square meters of land use right in Hangzhou at the end of 2021 to invest in the construction of 1 million new software home and supporting industrial projects. The project is planned to invest 2.496 billion yuan and is expected to start in the first quarter of 2022. The first phase of the project will be completed and put into operation by the end of 2023. The project is located in the East China regional production base, and the subsequent production will help to improve the supply efficiency, consolidate the company’s competitiveness in the East China market and further improve the market share. 2) In terms of foreign markets, the company issued an announcement on investing in the construction of Mexico’s self built base project at the end of 2021. The project plans to invest 1.037 billion yuan. It is expected to start in the first half of 2022, and the first phase of the project will be completed and put into operation in the middle of 2023. The company continues to promote the internationalization strategy, and the layout of the Mexican production base again this time. After the subsequent operation of the project, it will help to improve the depth and breadth of the company’s radiation to the North American market and even the global market.
Investment advice
Jason Furniture (Hangzhou) Co.Ltd(603816) is a leader in the soft furniture industry. It continues to be optimistic about the promotion of the company’s big home development strategy and benefits from the accelerated improvement of industry concentration. Maintaining the previous profit forecast, the company’s revenue from 2021 to 2023 is expected to be RMB 180.01/222.25/26.743 billion respectively; From 2021 to 2023, EPS was 2.73/3.38/4.15 yuan respectively, corresponding to the closing price of 71.85 yuan / share on January 13, 2022, and corresponding PE was 26 / 21 / 17 times respectively, maintaining the “buy” rating.
Risk tips
Risk of continued maritime tension; Changes in the international trade environment; Downstream demand is lower than expected; Risk of substantial price increase of raw materials; Risk of large exchange rate fluctuations. one hundred and ninety-nine thousand and twenty-eight
