\u3000\u3000 Xlinmen Furniture Co.Ltd(603008) (603008)
The company issued a performance pre increase announcement. It is expected to realize a net profit attributable to the parent company of 550-560 million yuan in 2021, with a year-on-year increase of 75.49% – 78.68%; The net profit attributable to the parent company after deduction was 495-505 million yuan, with a year-on-year increase of 57.95% – 61.14%.
Strengthen the brand leading strategy and gradually enhance the brand influence.
The company continued to increase investment in the brand side. In the first three quarters of the 21st century, the company invested 767 million yuan in sales expenses, a year-on-year increase of + 32.9%. Continue to promote the brand rejuvenation strategy. In October 2021, the company officially announced the new generation of well-known artist Yang Yang as the new spokesperson. At the same time, it actively expanded the campus mattress business and provided college students with a mattress product set suitable for the dormitory environment in the school season, which is conducive to establishing brand awareness and broadening the audience from the student era. Under the background of the rise of domestic products, the “national tide” positioning of Xlinmen Furniture Co.Ltd(603008) brand is continuously strengthened through marketing. The company launched Guochao mattress products in conjunction with the Forbidden City Culture for two consecutive years, integrating the traditional patterns into the product design. In terms of marketing, the company organized a theme tour, combined the traditional wedding customs, Hanfu and other traditional elements, took the opportunity to promote the products containing Guochao elements in the process of the activity, and strengthened consumers’ awareness of the positioning of Xlinmen Furniture Co.Ltd(603008) brand “Guochao”.
Focus on the main furniture industry, Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channels have been expanded rapidly, and the independent brand business has maintained rapid growth.
21h1’s independent brand retail business achieved a revenue of 1.992 billion yuan, a year-on-year increase of + 107%, of which offline sales were 1.57 billion yuan, a year-on-year increase of + 114%, online sales were 422 million yuan, a year-on-year increase of + 87%, and Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channels expanded rapidly. As of 21h1, the company has 4017 independent brand stores, including 2576 Xlinmen Furniture Co.Ltd(603008) stores, 898 Ximian distribution stores, 489 M & D sofa stores and 54 chateau’ax stores. The new stores are mainly high-quality locations above class A in home stores. We believe that software products focus on offline experience, and high-quality stores are scarce resources, The epidemic objectively prompted local brands to gradually withdraw from core stores, and the offline pattern is expected to be clear in the next 2-3 years. In online channels, Xlinmen Furniture Co.Ltd(603008) brand has formed in-depth cooperation with tmall, jd.com, Suning.Com Co.Ltd(002024) and other core e-commerce platforms, leading the sales industry in e-commerce promotion activities. We believe that compared with personalized products such as sofas and soft beds, the product attribute of mattress itself is partial to the standard product, which is conducive to its rapid expansion in e-commerce channels.
Driven by the policy of furniture going to the countryside, the demand in rural areas is expected to be gradually released, promoting the penetration of mattress categories.
Furniture and home appliances are both durable consumer goods. During the implementation of China’s home appliances to the countryside policy, the number of washing machines, refrigerators, color televisions and air conditioners per 100 households of rural residents increased from 45.94/26.12/94.38/8.54 in 2007 to 71.20/72.90/112.90/29.80 in 2013, and the CAGR was 8% / 19% / 3% / 23% respectively. From 2007 to 2013, the sales of washing machines, refrigerators, color televisions and air conditioners increased from 3836.2/4465.9/8381.2/88167000 to 7245.1/9135.6/13958.1/140569000 respectively, and the CAGR was 11% / 13% / 9% / 8%. The furniture to the countryside policy may be similar to home appliances to the countryside, which is expected to improve the ownership of all kinds of furniture products in rural areas. We believe that the policy level clearly proposes to promote “furniture to the countryside”, which is conducive to the head furniture enterprises with outstanding manufacturing end products and leading cost control ability to launch marketable products, continue to expand the sinking market and improve market share.
Profit forecast and Valuation: as the leader of the mattress industry, Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channels continue to expand and the influence of independent brands is gradually established. With the continuous optimization of the industry competition pattern, under the background of the rise of domestic products, the leading position of the company will continue to be consolidated by relying on strong product and channel strength, and the employee incentive plan will deeply bind the interests of core employees, To improve team cohesion, it is estimated that the net profit attributable to the parent company from 21-23 is RMB 550 / 7.2 / 940 million respectively, with a year-on-year increase of + 75.7% / + 30.6% / + 30.4%, corresponding to PE of 25X / 19x / 15x, maintaining the “buy” rating.
Risk warning: the forecast data is only the preliminary accounting data, and the specific financial data shall be subject to the annual report; The expansion of offline stores is less than expected; Industry competition intensifies; The price of raw materials fluctuates.
