16H1 income increased 13.96%, net profit increased 6.33%, deducted 16% non-net profit drop of 16%, the company realized revenue of 289 million yuan in the first half of 2016, the same increase of 13.96%, return to the mother net profit of 9.8948 million yuan, the same increase of 6.33% EPS0.08 yuan. After deducting non-return, the net profit was 7.07 million yuan, down 16.07% from the same period last year, mainly due to increased product promotion, increased investment in new businesses such as vertical e-commerce, and other factors. The difference of net profit before and after deducting non-return mainly comes from items such as government subsidy and entrusted financial income.
Quarter by quarter, 15Q1-16Q2 revenue growth rate-12.93%,-18.81%,-14.93%,-1.30%, + 0.73%, + 29.71%, net profit growth rate-25.44%,-74.77%,-32.79%, + 19.51%, 8.36%,-3.36%. 2015Q4's closure of some high-rent stores led to a reduction in rental fees and a year-on-year decline in sales expenses 2.04PCT, which contributed to an increase in net profit. 2016Q2's promotion and participation in online promotional activities such as the "June 18 Shopping Festival" led to a significant increase in revenue, but a decline in gross profit margin led to a slight decline in net profit.
The company expects the return net profit to grow between-25% and 10% in the first three quarters of 2016, mainly because new businesses such as Internet vertical e-commerce are in the early stage of development. there is a certain degree of uncertainty in revenue contribution and investment in e-commerce information system construction, supply chain integration, talent reserve and so on, thus affecting performance.
With the sinking of channels and the strengthening of sales promotion, the company has been able to reverse the declining trend of income. The company is a middle-end home textile enterprise located in the second-and third-tier market, and its main products include kits, quilt cores, pillow cores, etc., with home textile brands such as "multi-favorite", "Meimiankang", "Fenanuo" and medical textile brand "Lebekang", which are mainly aimed at young consumers. The company's home textile main brand focuses on fashion and high performance-to-price ratio: on the one hand, the company understands consumer demand through direct store research, strengthens digital printing technology and design strength, and launches more than 200 new products every year. In color, theme, pattern and other aspects in line with the fashionable style of young customers; on the other hand, the price increase rate of products is lower than that of listed companies in the same industry, providing consumers with mid-end home textile products with high performance-to-price ratio. At present, the company has outsourced all its production, launched the construction of a home textile industrial park in 2014, and is expected to be completed in the second half of 16 years. The proportion of self-production will be increased after it is put into production, and the adverse impact of rising labor costs on outsourcing costs will be reduced, which is conducive to maintaining the parity strategy.
Affected by the slowdown in home textile demand and the impact of e-commerce, the company's revenue growth from 2013 to 2015 was 1.76%,-17.28% and-11.25%, respectively, and the net profit growth rate was-25.12%,-25.17% and-17.60%, respectively. By promoting the sinking of offline channels and the promotion of new online products, the company has improved the level of channel management, while strengthening sales promotion, the declining trend of 16H1 revenue has been reversed and net profit has rebounded slightly.
Both gross profit margin and expense rate have declined, and inventory pressure remains.
16H1 gross profit margin of 38.08%, lower 4.6PCT year-on-year, including: 1) the company stepped up promotional efforts to promote sales, kit, pillow core products gross profit margin fell 7.74PCT and 3.07PCT. 2) according to the adjustment of product structure, the gross profit margin of 16H1 kit, quilt core, pillow core and other products is 36.52%, 42.94%, 43.97% and 36.18% respectively, of which the income of suites and other products with lower gross profit margin increased by 2.6PCT and 1.27PCT compared with the same period last year, while the income of quilt core and pillow core products with higher gross margin accounted for 3.25PCT and 0.86PCT. 2016Q1-Q2 's gross profit margin is 39.53% (- 3.59PCT) and 36.73% (- 5.42PCT). Increased promotion efforts led to an increase in gross profit margin decline in the second quarter.
In 2012-15, the gross profit margin of the company basically showed an upward trend, which was 39.23%, 40.93%, 43.22% and 41.60%, respectively. The main reason for the increase was that the company strengthened the level of cost control and increased the proportion of network channels with higher gross profit margin in self-operated channels. In 2012-14, the gross profit margin of online channels was maintained at about 45%, and the share of income increased from 9.16% to 21.13%.
The 16H1 sales expense rate was 21.11%, down 2.56 PCT from the same period last year; the management expense rate was 12.20%, down 1.68 PCT from the same period last year; and the financial expense rate was 0.002%,-0.2% in the same period last year. The company controls fees properly, and management and sales expenses remain stable. at present, the "information construction project" raised on the stock market has been basically completed, which will save manpower in product development, supply chain management, financial processing and other links in the future, and effectively reduce operating costs. After the use of the raised funds, the interest income decreased significantly, resulting in an increase in the company's financial expenses compared with the same period last year.
The rates of sales expenses in 2012-15 were 21.54%, 23.38%, 23.62% and 21.64%, mainly due to changes in the salary of sales staff and store rents caused by changes in channels; the rates of management expenses in 2012-15 were 6.32%, 7.97%, 11.10% and 12.10%, respectively. The increase in R & D expenditure and staff salary led to an increase in the rate of management expenses year by year.
In terms of inventory, under the influence of increased sales promotion, the number of goods in stock and commissioned processing materials decreased, and the inventory at the end of June 2016 decreased by 7.73% to 205 million yuan compared with the end of 2015. The inventory in 2012-15 is 283 million yuan, 218 million yuan, 203 million yuan and 222 million yuan respectively, and the inventory is relatively stable in the past three years. The ratio of inventory to income of 16H1 is 70.93%, and the overall inventory pressure is still large.
With channel optimization, there is still room for the development of the main home textile industry.
The offline channel of the company is mainly franchise stores, with 117 direct stores and 772 franchise stores at the end of 2014. After listing in June 2015, the company began to implement the direct store expansion fund-raising project, and plans to build 152 new outlets with a construction period of 24 months. The company promotes the sinking of channels in market segments, sets up sales terminals in second-and third-tier cities and even county, township and town levels, and expands the area and upgrade the image of high-quality shops to promote the growth of main business income; online, the company has its own network channels, and began to expand its Internet vertical e-commerce business in 2015. China's first network personalized high-quality product ordering platform HBDIY, sales T-shirts, POLO shirts and other derivatives In 2016, it began to build a well-known IP connection platform, and jointly developed and operated derivatives with IP, such as star artists, well-known animation and video platforms, to open up new profit growth points. at present, it has cooperated with Garfield, Cherry Meatball and other well-known animation IP to jointly develop home textile products. In terms of group purchase, the company has established cooperative relations with a number of hospitals, kindergartens, schools and other units, and will strengthen the group purchase business of promoting medical textile brand "Lebekang" products in the future.
According to Euromonitor statistics, the market size of the national textile industry reached 186.981 billion yuan in mid-2015, an increase of 2.53% over the same period last year, and the growth rate of the industry continued to slow in the face of the depressed consumer market. Compared with the development experience of Japan, we find that there are basically no independent home textile enterprises in Japan, and home textile products are mainly provided by home textile enterprises. during the economic downturn, consumers prefer to consume cost-effective household and home textile products. Inexpensive enterprises such as Yideli and MUJI have rapidly grown into industry leaders and their market share continues to rise. At present, the concentration of Chinese home textile enterprises is still very low. Luolai, the leader of the industry, accounted for less than 2% of the market in 2015, and there is still a lot of room for growth. After the listing of the company, the number of channels remains basically stable, but the channel structure is constantly optimized, closing unprofitable outlets and opening new stores at the same time. By the end of June 2016, the investment progress of the company's channel fund-raising project was 47.36%. The progress of opening a store in the company's 16H1 has slowed down, but the overall progress is basically in line with expectations. At present, the operation time of the new network is relatively short, and the benefit is not obvious, but combined with the experience accumulated by the previous channel adjustment, the operation quality of the new store will be improved, and it is expected to continue to contribute to the performance in the future.
The construction of the home textile industrial park is coming to an end, escorting the growth of the main industry. The company started the construction of Changsha Industrial Park in 2014. On the one hand, it introduced international leading automation equipment to increase the production capacity of middle and high-end products and high-definition printing and dyeing. It made up for the deficiency of the existing outsourcing processing. On the other hand, it built the company's largest logistics center and integrated the office resources of Duofi headquarters, Shenzhen subsidiary and Shanghai subsidiary. Improve the collaborative efficiency of the business. The construction of four factories and the capping of shift buildings and office buildings have been completed in the first half of 2016, and the renovation work of the latter two buildings is under way, which is expected to be put into production this year, and the proportion of self-production will be increased according to follow-up production planning.
The completion of the construction of the industrial park is conducive to the expansion of the company's main home textile business. 1) the company will focus on promoting classic products for target consumers, while the technical level of external processors is low, so the company needs to set up its own production base to ensure the production of high-quality products. 2) the high level of automation of the industrial park production line will help the company to consolidate its cost advantage, improve the stability of product quality, and control the impact of rising labor costs. 3) after the improvement of the automation level of the production line, the company can effectively shorten the production cycle, implement flexible production, and improve the efficiency of logistics and distribution online and offline, so as to meet the characteristics of rapid change, various styles and small batches of network channels.
It is surprising that the Internet vertical e-commerce strategy opens up a new world.
The company's Internet vertical e-commerce strategy continues to advance. 1) HBDIY, the Internet vertical e-commerce platform launched by the company in the first half of 2016, has been put into operation. The platform is aimed at personalized young consumer groups, adopts its own full-process production chain with customized production mode, and develops its own products characterized by individual graphics. At present, T-shirts, POLO shirts and other categories have been launched. In the future, the platform will add bed products, pillows, environmental bags, mobile phone cases and other categories to meet the needs of personalized and high-quality customization. 2) the company will expand the IP derivatives operation service business and negotiate with Internet well-known IP, star artists, music platform, video platform, game platform, secondary platform, etc., and will jointly develop related derivatives in the future. At present, online channels have reached cooperation with Garfield, Cherry meatballs and other well-known IP to sell home textile products with related themes, and the sales volume of the new IP theme on Tmall store is significantly higher than that of other categories at the same price.
To build IP derivatives services, the company has huge room for new business growth. Well-known IP often has a large number of loyal fans and high user stickiness. Cashing out through derivatives such as toys, clothing, home furnishings and accessories is the only choice to maximize the value of IP. In 2014, the global IP licensing market reached US $241.5 billion, of which China's brand licensing market was US $6.14 billion, which is in the stage of rapid development. Multi-favorite home textile products is one of the important categories for IP to realize, with high value, strong user stickiness and other characteristics, the company has custom T-shirts and other means of cooperation with Lu Han, Li Yifeng and other well-known stars to realize derivatives, and cooperation with well-known animation IP, has accumulated rich experience in derivatives operation, and is expected to sign stars in the future to expand the IP category and open up new performance growth points.
The main home textile industry is expected to stabilize, IP derivatives new business continues to promote, focus on the progress of reduction we think: 1) home textile business, the company faces the vast second-and third-tier cities of the home textile market, the market concentration is low. After listing, the company will increase the number of self-owned stores by 152 within two years, grabbing more market share. At present, the new store has not significantly contributed to the performance, and is expected to become a performance growth point in the future; the commissioning of the industrial park will also help the company to develop middle and high-end product categories and improve operational efficiency. 2) IP derivatives new business, the company has reached a cooperation with the well-known animation IP, and significantly promoted the growth of online channel product sales. In the future, with the help of rich experience in the operation of IP derivatives, the company will develop categories other than home textiles, and the cooperation with well-known stars and other strong IP is also expected to hit the ground. In addition, the company launched HBDIY vertical e-commerce platform, developed well-known derivatives T-shirts, POLO shirts and other products, and adopted customized mode to enhance user stickiness, the future will also expand product categories and comprehensively develop the IP consumer goods market.
On June 13, 2016, 28.98 million restricted shares held by 35 shareholders were lifted and circulated on the market, accounting for 24.15% of the total share capital, of which 3.86 million shares still need to be locked up because senior executives promised that the transferred shares would not exceed 25% of the shares held each year during the term of office after the ban was lifted. The actual number of shares in circulation is 25.12 million.
The company still has 61.02 million restricted shares, accounting for 51% of the total share capital, which is expected to be lifted on June 11, 2018.11. After the lifting of the ban, some shareholders of the company chose to reduce their holdings. On June 16, 2016, the company received a notice that director Zhang Wen reduced his holdings of 182700 shares, accounting for 0.15% of the total share capital, with an average reduction price of 37.04 yuan per share; on 7.5 days in 2016, the company received a notice that director Zhang Haiying reduced his holdings of 371600 shares, accounting for 0.31% of the total share capital, with an average reduction price of 39.61 yuan per share On July 25, 2016, shareholders Dachen Caixin and Dachen Venture Capital planned to reduce their holdings of no more than 9.1 million shares, accounting for 7.58% of the total share capital, before January 28, 2017. after the reduction, the remaining shares were 4.92%.
The company expects the year-on-year change in net profit from January to September 2016 to be-25% to 10%, mainly due to the uncertainty of the revenue contribution and investment of the Internet vertical e-commerce business. At present, the Internet vertical e-commerce business is in a pioneering period, and the operation and profit model need to be further implemented. We predict that the EPS of the main home textile industry in 2016-18 is 0.34,0.40,0.43 yuan respectively, with a high short-term valuation, but considering that home textile is expected to gradually stabilize, the transformation of Internet vertical e-commerce new business space is large, explosive power is strong, give "increase" rating.
Risk Tips:
Marketing network expansion is not up to expectations, cooperation with stars to expand IP derivatives business is not up to expectations, Internet vertical e-commerce investment affects performance, and so on.