Main points of investment
Event: 1) according to the annual report, the company's operating income increased by 6.82% to 4.685 billion yuan in 2019, and its net profit reversed to 500 million yuan (compared with a net loss of 108 million yuan in the same period last year). The reasons for the significant improvement in net profit are mainly due to ① 's gross profit margin increased by 8.05pct to 28.31% in 2019 due to RMB exchange rate fluctuations and the improvement of internal management efficiency, and the total investment income and fair value floating profit of ② 's stock investment business totaled 296 million yuan (a loss of 26.32 million yuan in the same period last year). 2) the company intends to distribute a cash dividend of 1.20 yuan (including tax) for every 10 shares to all shareholders, with a total distribution of 261 million yuan, accounting for 52% of the 19-year net profit. 3) the company intends to buy back the company's shares with self-raised funds of 50 million ~ 100 million yuan (including), and the repurchase price does not exceed 6 yuan per share, and the repurchased shares are intended to be used for the later implementation of equity incentive or employee stock ownership plan.
Adjust the sales strategy, optimize the management efficiency, the income side to achieve counter-trend growth in the context of trade frictions.
The company actively opened up the European market and new customers in 2019, and carried out employee stock ownership plan and shareholder return plan in internal management, which effectively improved management efficiency, so the revenue side achieved counter-trend growth in the context of trade frictions. From a regional point of view, the European market increased by 27.46% to 1.997 billion yuan in 19 years, the North American market increased by 1.45% to 2.253 billion yuan, and the domestic market decreased by 25.85% to 334 million yuan. From a sub-product point of view, leisure furniture increased by 5.6% to 3.203 billion yuan, shading products increased by 21.7% to 1.248 billion yuan, and metal products decreased by 32.07% to 176 million yuan.
Under the continuous focus on the main business strategy, the profits of the main business are growing steadily. Excluding the impact of non-recurring item gains and losses (exchange gains and losses and goodwill impairment losses), the company's 19-year main business profit increased by 324.5% to 430 million yuan (the sharp increase was mainly due to the increase in gross profit margin caused by exchange rate fluctuations and improved management). In the future, the company plans to strictly lock the exchange rate, while shrinking the scale of non-main business investment (secondary market investment), the gap between net profit and main business profit will be narrowed in the future, and the fluctuation range of net profit will also be effectively controlled.
The company's main business is the export of outdoor furniture, and the terminal demand is less affected by the epidemic. The company's main export areas are Europe and North America, where the current epidemic situation is more serious. However, the outdoor furniture products operated by the company are based on its special category, and the terminal demand is less affected. Under the background of the sharp decrease in outdoor time, the demand for outdoor furniture at home is expected to increase steadily, so the impact of the epidemic on the current business year is limited. The epidemic mainly affects the channel end, and most of the company's customers are comprehensive merchants. With the deterioration of the overseas epidemic situation and the upgrading of management and control, Q2 may exert pressure on the dynamic sales of channel merchants, so it is necessary to closely observe the development trend of the epidemic. In the company's previous forecast for the first quarter, it is estimated that 20Q1 will achieve a net profit of 287% to 339 million yuan, an increase of 10% to 30%. After deducting the changes in fair value and the impact of investment income, the main business profit will be about 240% to 2.9 million yuan, an increase of about 14% to 40%, that is, the growth in the first quarter will mainly come from the main business.
Profit forecast and investment rating: considering that the company continues to focus on the main business strategy, management improvement, and the market is expected to further gather to the leader after the epidemic adjustment, the company's 2020-2022 net return is expected to increase by 25%, 17%, 16%, and 620 million / 730 million / 850 million yuan, respectively, corresponding to 14.5X/12.4X/10.6X, respectively, and maintain the "buy" rating.
Risk hint: the risk of sharp exchange rate fluctuations and the risk of stock price fluctuations of existing investment targets in the secondary market.