Event description
The company realized revenue / return net profit of 3.085 billion yuan in the first three quarters of 2020, down 26.79% from a year earlier by 92.88%, deducting a loss of 172 million yuan from non-net profit; Q3 alone realized revenue / return net profit / deducted non-net profit 14.00 shock 1.41 billion yuan, with year-on-year changes of-6.92%, 1.7% and 3.99%.
Event comment
Business improvement is expected to continue, single Q3 profitability. The company's revenue in the third quarter fell 6.9% from a year earlier, a decrease of 17.2% from a month earlier. Among them, wholesale business (export) recovered well, single Q3 revenue increased by 23.8%; direct operation continued to narrow, and single Q3 revenue also decreased by 11.4%, narrowing by 3.9pct compared with the second quarter; and joining business Q3 decreased by 39.1% compared with the same period last year. As the income decline narrowed and capacity utilization improved, as well as the cost reduction and efficiency improvement measures on the manufacturing side, the gross profit margin recovered well, and the single Q3 gross profit margin was basically flat year-on-year (same as the increase in 0.1pct).
The control of superimposed expenses (the expense rate during the single Q3 period decreased 0.3pct compared with the same period last year), and the single Q3 net interest rate / deducted non-net interest rate increased 0.9pct compared with the same period last year. With the improvement of the prosperity of the industry and the adjustment of the company's internal products and channels, the operation is expected to continue to improve, and the 15.6% increase in contract liabilities also indicates that the company's orders are good to a certain extent.
Develop digital marketing and optimize the organization & supply chain to improve efficiency and reduce cost. The company cooperates with Huawei, Tencent and other companies to promote digital transformation to achieve lower-cost customers through online multi-channel drainage and precision marketing; the company's organizational structure changes from vertical to horizontal, in terms of performance evaluation and incentives, to stimulate employee vitality under the guidance of sales-profit growth and efficiency improvement Continuously promote supply chain improvement strategy, including cost reduction and efficiency improvement of manufacturing base, as well as inventory management improvement, etc. And the company introduces high-quality strategic investor Ganzhou Development, or can make full use of Nankang District's profound home industry foundation and resources to help the company improve the efficiency of the supply chain.
Retail sales have picked up and export demand has revived. The retail sales of furniture in September fell 0.6% from the same period last year, the growth rate increased by 3.6pct compared with August, and the month-on-month improvement was greatly improved. The BHI (National Building Materials Home Prosperity Index) in September was 108.26 points, an increase of 6.33 points from the previous month, which can also verify the rising trend of the boom. From the tracking of the industry, the leader has gradually achieved significantly better than the industry and its growth last year after the epidemic, and is accelerating to increase its share. Working from home makes consumers' demand for home renovation and reprovisioning increase, and promote the recovery of export demand.
Be optimistic about the vitality brought by the follow-up changes within the company, and gradually build an efficient retail system with rich retail experience and multi-category and multi-channel development trend. We are optimistic that after the company's internal interests are thoroughly straightened out and the team structure is adjusted and refined, along with the completion of the project to promote household warming, the company will increase revenue and reduce expenditure, reform and improve efficiency, and the follow-up is expected to gradually release performance flexibility. We estimate that the EPS for 2020-2022 will be 0.10, 0.28, and 0.33 yuan, corresponding to PE, which is multiple of 53-18-15, maintaining the "buy" rating.
Risk hint
1. The real estate growth rate is lower than expected.
two。 The change within the company was less than expected.