Fuanna (002327) 2018 Annual Report Comment: Steady Growth of Home Textile Business Still Has Estimated Room for Repair
Core points: 1.
The event company released its 2018 annual report. From January to December 2018, the company achieved revenue of 29.
180,000 yuan, an increase of 11 in ten years.
55%; Realize net profit attributable to parent company 5.
43 ppm, an increase of 10 in ten years.
11%; net profit deducted from non-attributed mothers4.
90 ppm, a ten-year increase6.
18 years to achieve EPS of 0.
On April 10, 2019, the 17th meeting of the fourth board of directors of the company passed the resolution on the company’s profit distribution plan for 2018, and distributed a cash dividend of 5 yuan (including tax) to every shareholder of 10 shares, with a yield2.
Among them, 2018Q1-Q4 operating income increased by 28 respectively.
04% / 12.
02% / 6.
93% / 7.
20%; net profit attributable to parent company increased by 22 respectively.
13% / 10.
99% / 29.
Our Analysis and Judgment (I) Home Textiles: Performance is picking up. From the perspective of long-term stable growth of revenue sharing, the company’s business is still dominated by home textiles, accounting for 96% of total revenue.
58%, the scale of the home business is relatively small, and it is still in the incubation stage.
In 18 years, the company’s home textile business income 28.
19 ppm, an increase of 10 in ten years.
The home furnishing business locates personalized light luxury art finished home furnishings. From 2017 to the end of 2018, the number of Meijia flagship stores reached 12 and the total store area reached 13,000 square meters.
In terms of channel breakdown, online product adjustments have helped e-commerce grow against the trend.
In the initial period, the company’s online revenue increased by 16%, accounting for about 29% of the total channel revenue.
Due to the existence of a base for e-commerce in 18 years, some unfavorable factors for the subsidy of traffic and the emergence of social e-commerce challenges to traditional e-commerce channels, the company’s online value-added speed in the first three quarters reached expectations.
In the second half of the year, by adjusting the product structure, the growth rate accelerated in the second half of the year. Tmall’s “Double Eleven” placed second in the category of home textiles, and the growth rate ranked first.
南京龙凤网 Offline: Expanding the store, optimizing both channels, and the affiliate marketing system has achieved initial results.
According to the budget, the company expects offline revenue to increase by 9%, mainly from new stores.
In terms of seasons, after internal management adjustments, Q4 revenue has picked up from Q3, but net profit has decreased by 0.
09%, mainly due to the gradual adjustment of the hypertension tax rate, pressure on home business expenses and streamlining of the team.
As of the end of the reporting period, the company’s offline channel stores (counters) have reached approximately 1,310.
In general, the company’s channel structure has continued to be optimized, with offline store layouts aside, the proportion of second-tier cities is 53%, and the proportion of large stores (over 250 square meters) is nearly half.In addition, the company continued to promote the construction of “v +” member marketing management system. As of the end of the reporting period, the number of members has increased to 53.
The company has increased its efforts in investment and construction of smart store and supply chain data management. A large number of smart stores have been deployed in channel terminals, providing accurate member service guidance data and providing big data platform support for members’ personalized services.
(II) Home furnishing: The layout is gradually rapid, and the company has not achieved profit for 18 years. The company continues to expand the home furnishing business and accelerate its business layout.
At present, the company’s home business is still in the incubation period and implements a strict budget management system. The home business has transformed into 12 directly operated stores with a total area of 1.
30,000 square meters.
From the perspective of revenue, the company’s internal home business income was nearly 100 million, an increase of more than 30%. However, due to the large amount of expenses brought by business expansion, it still has not achieved profit.
The company plans to expand its business volume through franchise in 19 years to achieve breakeven.
(3) The overall operation has entered into a stable, rising inventory period, the account receivables have increased from the same period of the previous year, and the operating cash flow has decreased slightly.
As of the end of 2018, the scale of inventories has increased by ten years.
65% to 8.
24 ppm, an increase faster than revenue growth11.
55%, mainly due to the impact of weak terminal consumption, but compared to 9Q18.
The scale of 9.9 billion inventories decreased on a large scale, and the inventory turnover days increased by 4 days to 190 days; the scale of accounts receivable expanded and increased by 14.
38% to 3.
USD 7.2 billion, accounts receivable turnover days decreased by 1 to 43 days; due to the rapid expansion of household business, expenses increased and net operating cash flow decreased by at least 5.
58PCT to 3.
From January to December, the gross profit margin rose slightly to 0 in the short term.
24PCT to 49.
82%, the net interest rate was relatively reduced by 0.
24PCT to 18.
62%, of which the gross profit margins for Q1 to Q4 2018 were 50.
93% / 50.
41% / 50.
38% / 48.
68%, the net interest rate is 17.
54% / 14.
82% / 17.
15% / 21.
87%, mainly due to the increase in prices and product structure optimization, the overall gross profit margin has increased.
In addition, since the company was qualified as a “emerging enterprise” in 17Q4, and the profitability was somewhat favorable, the net profit margin of sales from 18Q1 to Q3 gradually increased.
The expense ratio is maximized to increase by 7 from January to December.
88PCT to 29.
18%, of which, sales expenses, management expenses (including research and development expenses), and financial expense ratios are 24.
03% / 5.
03% / 0.
12%, change 8 every year.
04% / 3.
Increase in financial expenses The company’s financial expenses last year were extremely low, due to the increase in loan interest in 18 years.
The provision for asset impairment has been reduced by 10 years over 18 years.
32% to 476.
RMB 660,000, a substantial increase in losses due to inventory price declines of 58.
67% to 236.
100,000 yuan, the company’s inventory management capabilities have improved.
Maximize investment returns by 80.
44PCT to 5528.
400,000 yuan, 18 years of banking wealth management products received a significant increase in revenue.
Investment recommendations We expect revenue of 32 in 2019-2021.
5.3 billion, a ten-year growth rate of 9.
64% / 10.
51% / 11.
78%, net profit after deduction to non-mother is 6.
7 billion, a 10-year growth rate of 11.
99% / 12.
41% / 13.
20%, EPS is 0.
881 yuan, the company’s current sustainable corresponding PE for 2019-2021 is 13.
Considering that the company’s capital returns and average returns are comparable to those of home textile companies, the company’s overall forecast is still attractive. New brands, channels, and supply chain optimization have been gradually optimized. Online and offline synergies have gradually enhanced profitability.
For the first coverage, we give a “cautious recommendation” rating.
The risks indicate the market risks of new brand pioneers, the uncertainty of the end-consumption environment, the substantial increase in inventory or the risk of impairment.