Qumei Home Appliances released interim results for 2022:

22H1 income 2.537 billion (+ 0.94%), return net profit 126 million (- 2.18%), deduct non-net profit 87 million (- 24.93%) Among them, 22Q2 single-quarter income 1.224 billion (- 10.28%), home net profit 67 million (+ 0.68%), deduction non-net profit 43 million (- 35.59%), Q2 domestic epidemic situation and other unfavorable factors drag down income, exchange-overseas operating efficiency to improve profitability.

Under domestic pressure under multiple unfavorable factors of Q2, 22H1 achieved revenue of 619 million yuan (yoy-32.70%) and 22H1 domestic gross profit margin of 25.22% (- 8.0pct), mainly due to the rising cost of raw materials and the rigidity of part of the cost of sales. As the company's overseas business changed management and entered the high-speed development channel, the financial pressure was reduced, and the domestic price was not raised. Domestic retail business on the revenue side was affected by the epidemic, factory shipments in Beijing were blocked, Beijing stores closed, 22H1 revenue orders were under pressure, and bulk business projects were also affected by the epidemic. However, the total amount of 22H1 orders increased by 100% over 21 years, and unconfirmed orders in the first half of the year are expected to be confirmed in the second half of the year. At present, the domestic influencing factors are gradually eliminated, retail orders in July have been corrected, and 150-200 new stores are expected to be opened throughout the year. In the second half of the year, the company will promote the brand renovation plan, which is expected to reshape the brand value and drive the domestic business to stabilize and improve.

Ekornes growth is steady, business efficiency continues to improve, Q3 price increase landing profit elasticity is expected to achieve revenue of 1.93 billion yuan (yoy+19.70%), of which Q1 growth 34% Q2 due to the Russian-Ukrainian war, dealer inventory and other factors, the current business has picked up, and orders improved quarter-on-quarter from June to July. Gross profit margin 36.98% (yoy-8.72pct), mainly due to rising raw material costs and sea freight is still high compared with the same period last year, Q2 company price increase of 6% Murray 8% Q3 full landing is expected to improve profitability. The net profit rate 22H1 is 12.43% (yoy-0.46pct). Under the pressure of gross profit margin, the net profit margin is basically stable, and the operating efficiency of E company increases rapidly with the growth of scale. Look at it by brand:

Stressless: 1.425 billion (yoy+20.0%), the growth is mainly due to the rapid growth of sofas, electric chairs and other accessories, the 22H1 order growth rate of 50% and the domestic market expansion, Q1 order growth rate of more than 100% Q2 affected by the epidemic is still nearly 40%. With the improvement of the epidemic in the second half of the year, the company will accelerate the expansion of stores in China.

IMG: 399 million yuan (yoy+23.0%), retail business grows steadily with the expansion of global stores, OEM business due to 21 years of increased procurement by American customers, destocking in the first half of the year slightly under pressure.

Svane:1.06 billion (yoy-3.72%), Q2 company has begun to use the Stressless brand and global channel layout to expand globally, and is expected to accelerate growth in the second half of the year.

Gross profit margin is under pressure, financial replacement will release profit elasticity during the year. 1) 22H1 gross profit margin is 34.23% (yoy-7.12pct), of which Q2 is 32.79% (yoy-6.62pct,qoq-2.79pct), mainly due to rising raw material costs and income affected by the domestic epidemic.

2) the expense rate during the 22Q2 period is 27.95% (- 4.41pct), including sales expense rate compared with the same period last year-3.81pct, management + R & D expense rate year-on-year-1.5pct, and financial expense rate-1.59pct, which is mainly foreign exchange earnings. The company completed the debt swap during the year and will release profit elasticity in the second half of the year. Overall, the 22Q2 homing net interest rate is 5.51% (yoy+0.6pct,qoq+1.08pct).

3) the operating cash flow of 22Q2 is 183 million yuan (22Q1 is 17.91 million yuan), which is greatly improved compared with the previous month.

Profit forecast and valuation

It is estimated that the company's revenue in 21-23 will be 55.5 million yuan, an increase of 9%, 18% and 17% respectively over the same period last year. To achieve a net profit of 3.5 million yuan, an increase of 97% 54% and 23% respectively over the same period last year. Corresponding to the current PE14/9/8X, the profit contributed by China in the second half of the year and the impairment of Evergrande in 21 years constitute a low base, the profitability of overseas price increase and landing is improved, the financial cost of debt swap is reduced, the performance is flexible, and the "Buy" rating is maintained.

Risk hint

Ekornes domestic expansion falls short of expectations; overseas market demand declines; debt swap progress falls short of expectations