Items:
The company announced its mid-term results for 2022, with FY2023H1 achieving revenue of HK $9.289 billion and YOY-9.1%; achieving a net profit of HK $1.092 billion, YOY+10.5%. If calculated in terms of RMB, FY2023H1's total income, YOY-3.7%, 's operating income, YOY-4.8%, 's net profit, YOY+15.6%.
Comments:
Domestic sales are under pressure as a whole, with a slight increase in Europe. FY2023H1 China / North America / Europe and other / Home Group realized revenue of 57.13, 25.64, and HK $670 million, respectively, YOY-10.7%/+0.1%/+2.1%/-39.9%.
1) Chinese market: the net number of specialty stores (including sofas, mattresses, etc.) increased by 262 to 6230, accelerating the expansion of the domestic market in the first half of the past three years with a compound growth rate of 25.4%. M & A style, Pliny 782 stores (120 new) and SUNING channel stores According to different channels, the income of offline stores / online e-commerce is HK $4.18775 billion. According to the categories of HK $YOY-9.7%/-0.9% and RMB YOY-5.5%/+3.7%;, the income of sofa / mattress is HK $3.835 billion, HK $YOY-11.5%/+2.8% and RMB YOY-7.4%/+7.6%. Split into volume and price, sofa sales / ASP changed by-1.5% and 4.8% respectively compared with the same period last year. 2) North American market: FY2023H1 achieved sales of 2746 million units, YOY-19.28%, overall price increase as the core logic, the compound growth rate of 16.4% in the first half of the past three years. 3) Europe and other markets: focusing on strengthening the customer network and improving the product line, FY2023H1 achieved sales of about 60,000 units, and YOY+11.32%, grew at a compound rate of 15.8% in the first half of the last three years.
Raising prices to hedge against cost pressure, profitability as a whole is sound. FY2023H1 China / North America / Europe and other overseas markets / Home Group gross profit margin changed from + 4.2/+0.7/-2.9/-3.1pcts to 39.9% to 39.9% to 41.8% to 21.3% to 22.5% respectively. The overall gross profit margin also increased by 2.6pcts to 38.8%, mainly due to the hedging of price increases under the fall in raw material prices. On the expense side, the rate of sales + administrative expenses increased to 25.9% compared with the same period last year.
Taken together, net profit margins rose 2.1pcts to 11.8 per cent year-on-year. In addition, the turnover days of accounts receivable / accounts payable in FY2023H1 are higher than those in FY2022 + 6 times from 5 days to 39 days, which is slightly under pressure as a whole.
The global function sofa bibcock, the inside along the outer extension pace is steady, maintains the "strong push" rating. FY2022 achieved a total sales of 189.7 sofas, ranking first in the world, with a capacity utilization rate of about 66% in the domestic market, 51% and 80% in Vietnam and Huizhou, respectively, and factory construction in Mexico is steadily progressing. It is expected that the permeability of the Chinese market is expected to increase under the research and development of new young and miniaturized products superimposed by high-speed expansion, and the outward expansion can be increased under the overseas functional sofa high permeability superimposed multi-brand layout. A number of buybacks boosted business confidence during the year. On the whole, the retail enabling effect of dealers is gradually emerging, and the long-term growth path is clear. Based on this, taking into account the disruption or pressure of the epidemic, we estimate that the net return profit of FY2023 in 2025 will be HK $25.35 million, HK $28.56 billion, respectively (the previous value is HK $26.86 million), and the corresponding PE is 3.979 times that of 10-9-8. With reference to the relative valuation method, 16 times the valuation is given for fiscal year 2023, corresponding to the target price of HK $10, maintaining a "strong push" rating.
Risk tips: raw material prices and sea freight have risen sharply, and the impact of the epidemic has led to higher-than-expected macro-disturbances.