\u3000\u3000 Jason Furniture (Hangzhou) Co.Ltd(603816) (603816)
Event: the company issued the announcement of performance increase in 2021. The company expects to realize a net profit attributable to the parent company of RMB 1.65-1.73 billion in 2021, with a year-on-year increase of 95% – 105%; It is expected to realize the deduction of non net profit of RMB 1.42-15 billion, an increase of 140% – 154% at the same time; Considering the goodwill impairment of 484 million accrued by the company in 2020, excluding the impact of this base, the net profit attributable to the parent company is expected to increase by 24% – 30% and the net profit deducted from non net profit is expected to increase by 32% – 40% in 2021. Corresponding to the performance forecast, the net profit center attributable to the parent company in Q4 in a single quarter was 450 million yuan, an increase of 41.4% (after adjusting the caliber of goodwill impairment, the same below), and the non net profit center deducted from Q4 was 350 million yuan, an increase of 41.7%, in line with market expectations.
Overseas layout was promoted, and the pace of production expansion was accelerated. On December 15, the company announced that it plans to invest 1.04 billion yuan in the construction of overseas production bases in Mexico. The construction period of the project is 36 months. It is expected to start in the first half of 2022 and complete and put into operation in the first phase in the middle of 2023. When the overall goal is achieved, the revenue is expected to be about 3.02 billion yuan. Previously, the company’s 1 million sets of software home and supporting industry project in Qiantang, Hangzhou has acquired land, and the project has been carried out smoothly. The acceleration of the company’s capacity construction at home and abroad helps to improve supply efficiency, avoid tariff risk and improve the global competitiveness of the company’s products.
The endogenous operation is excellent, and the profit is expected to improve marginally. The management structure of the company has been adjusted in place, the volume of high potential categories has been increased, the channel structure has been optimized, the endogenous operation has been improved, and the growth rate of endogenous revenue is expected to be better than that of the whole. In terms of profitability, the contradiction between supply and demand of shipping in the fourth quarter has slowed down. Since October, the upward trend of shipping prices between China and the United States has been suspended, and the freight pressure has been relieved. Considering the implementation of price increase for domestic and export, the embodiment of scale effect driven by the volume of new categories and the invisible price increase brought by the continuous promotion of innovation at the product end, we expect the profitability of domestic and export sales to be marginally improved.
Channel: the breadth and depth have been further improved, and the optimization of the industry pattern has been continuously performed. Since the channel management reform in 18 years, the channel efficiency and flexibility of the company have been improved, and the leading retail moat has been widened. 1) In terms of breadth, the company actively explores the “1 + N + X” channel development mode, mainly promotes the integration of “software + customization”, speeds up the layout of potential energy stores and integrated large stores, and has abundant growth momentum under the integration of channels and categories. 2) In depth, under the existing regional retail center mode, the full implementation of the information system is conducive to the efficient feedback of the market and the transformation to a retail home furnishing enterprise. 3) In terms of pattern, the fragmentation of China’s channels makes small enterprises at a disadvantage in obtaining customers. The epidemic situation accelerates the clearing of the industry. With the improvement of categories and channels, the company’s retail home strategy path is clear and optimistic about the steady increase of market share.
Category: China and Taiwan expand their enabling categories, and the large-scale trend of high potential categories continues. The company adheres to the development path of single product – space – whole house – lifestyle. In the late development categories such as mattresses and functional sofas, the company strengthens the innovative research on materials, structure and technology by building a product middle platform department, so as to improve the competitiveness of products and lay a solid foundation for expanding high potential categories. In 2021h1, the company’s revenue of sofa products was 4.12 billion (+ 70.5%), that of bed products was 1.39 billion yuan (+ 54.2%), that of customized furniture was 294 million yuan (+ 118%), and that of integrated products was 1.39 billion yuan (+ 60.4%). We estimate that the three high potential categories of Q4 will continue the high growth trend.
Investment suggestion: the company implements the big home strategy of multi category and omni channel, with prominent channel and management advantages. It has entered the dividend period of management reform, and the software leader is expected to continue to grow steadily. We expect the company to achieve revenue of 17.75 billion yuan, 22.02 billion yuan and 26.71 billion yuan from 2021 to 2023, with year-on-year growth of 40.1%, 24.1% and 21.3% respectively, and realize net profit attributable to parent company of 1.70 billion yuan, 2.13 billion yuan and 2.6 billion yuan (the profit forecast was adjusted according to the performance forecast, and the previous forecast values were 1.71 billion yuan, 2.14 billion yuan and 2.62 billion yuan), with year-on-year growth of 101.6%, 25.0% and 22.3% respectively, corresponding to EPS of 269 million yuan, 3.37 billion yuan and 4.12 yuan, Maintain the “buy” rating.
Risk tip: the risk of declining prosperity of real estate, the risk of rising raw material costs, and the risk of declining average profit margin of the industry due to intensified competition.
