Overview of events
Recently, the company and China Science and Technology Asia Pacific Zhida (Beijing) Technology Co., Ltd. signed a "Qumeike Chuang Industrial Park Construction and Operation Cooperation Agreement". The two sides jointly operate office, plant and land leasing business: the company provides infrastructure construction, property management and related facilities, and China Science and Technology Asia Pacific is responsible for the introduction of park investment and industrial planning projects, and provides scientific and technological services to resident enterprises. at the same time, the listed company collects the rent of office building and factory building.
Analysis and judgment:
Promoting the construction of qu Meike Chuang Industrial Park is expected to alleviate the pressure on the company's financial costs. specifically, this cooperation: 1) the company gives China Science and Technology Asia Pacific the first phase of planned operating space of 9377 square meters and rent-free support for 3 years. The rest of the park (about 150,000 square meters of planned office buildings and factories) is planned by both parties through joint consultation, in which both parties jointly introduce high-quality enterprises, and the company collects office and factory rents. 2) for the project introduced by China Science and Technology Asia Pacific, the company pays an intermediary service fee to it according to a certain proportion of the annual rent, which is 30% of the annual rental income for the first 3 years of the lease period and 10% of the annual rental income for the next 3 years. In the long run, the company's interest-bearing liabilities show a downward trend, but the company's financial expenses are still under some pressure in the short-term high-interest environment. We believe that the construction and operation of qu Meike Industrial Park in cooperation with China Science and Technology Asia Pacific will help to supplement the company's short-term debt service funding sources and reduce the impact of financial costs on the company's profits.
2023H1 performance is under pressure under many factors, and the drag point is gradually exhausted. According to the company's semi-annual performance forecast for 2023, the net profit attributed to shareholders of listed companies by 2023H1 is expected to be-108 million yuan to-160 million yuan (estimated net profit for Q2 is-12 million yuan to-64 million yuan). The main reasons for the short-term pressure on the profit side are: 1) the substantial increase in the company's financial costs under the overseas inflation and interest rate increases; 2) under the influence of the conflict between Russia and Ukraine and high interest consumption costs, the decline in demand in the European and American markets has led to the reduction of overseas business orders, which account for a relatively high proportion of revenue; 3) the company's profit end has been affected to a certain extent under the high-priced raw material inventory; 4) the company has incurred an one-time cost due to the exchange of overseas debt during the reporting period. At the same time, the company merged factories in Vietnam and Thailand to reduce production and transportation costs in the Asia-Pacific region, resulting in an increase in one-time employee severance compensation. We believe that the company's performance is expected to improve as the debt costs are expected to continue to stack up raw material costs and the downward trend in global shipping prices as interest rate increases are running out.
There are more and more positive factors in the company, and the inflection point opportunity appears.
From the industry level: according to the National Bureau of Statistics, the retail sales of furniture above the quota from January to June in 2023 are + 3.8% compared with the same period last year (of which June + 1.2%). The home industry is expected to benefit significantly in the context of continuous improvement in real estate completion and domestic consumer policy support for home furnishings. From the corporate perspective: the overall development momentum of Ekornes's overseas subsidiaries is good, accelerating category expansion and the layout of the Chinese market; domestic business is expected to improve under the overall recovery of consumption, and the company is actively accelerating the transformation of innovation; and as the monetary tightening cycle in Europe and the United States is coming to an end, raw material costs and global shipping prices have dropped sharply, the company's profit environment continues to improve. The current share price of 5.73 yuan per share (as of July 25, 2023) has been at the bottom of history, reflecting excessive pessimistic expectations of the market. We believe that with the improvement of the business environment of the industry and the trend of continuous improvement of the company's operating capacity, qu Mei's investment layout has emerged.
Investment suggestion
With the gradual increase in positive factors, we are optimistic about the performance of Qumei's follow-up domestic and foreign business, and maintain the previous profit forecast. The company's operating income for 23-25 is expected to be 43.5952.25max 6.063 billion yuan respectively; EPS for 23-25 years is 0.05pm 0.50shock 0.65 yuan, corresponding to July 25, 2023 closing price of 5.73RMB / share, PE is respectively 121-12-9 times, maintaining the "buy" rating.
Risk hint
1) M & An integration is not as expected; 2) the recovery of real estate sales is not as expected; 3) the industrial park cooperation agreement is a strategic agreement, which has the risk of uncertainty; 4) the industry competition intensifies the risk.