Overview of events
Qumei Home released the third quarterly report of 2023. In the first three quarters of 2023, the Company realized revenue of CNY 2.932 billion, with a year-on-year revenue of CNY 21.83%; net profit attributable to parent company of CNY 206 million, with a year-on-year revenue of CNY 228.43%; net profit deducted from non-parent company of CNY 190 million, with a year-on-year revenue of CNY 253.28%. By quarter, Q3 realized operating income of RMB 984 million yuan in a single quarter,-18.88% year-on-year; net profit attributable to mother was RMB-49 million yuan,-242% year-on-year. In terms of cash flow, the net cash flow generated from operating activities of the Company in the first three quarters of 2023 was RMB530 million,+76.62% year-on-year, mainly due to the decrease in procurement of raw materials, purchased goods and taxes payable from the beginning of the year to the end of the reporting period.
Analysis and judgment:
Overseas continued destocking, demand is expected to accelerate repair.
The company achieved operating income of 984 million yuan in Q3,-18.88% year-on-year. We expect that consumers are cautious about furniture durable goods demand under overseas high interest environment, thus having a certain impact on overseas business with relatively high revenue. In September, the sales volume of new residential buildings in the United States was 435,000 units,-5.4% year-on-year, and the inventory of existing houses was 1.13 million units,-8.1% year-on-year. The inventory of furniture in the United States decreased significantly year-on-year. We expect that overseas stores will continue to go down, and the demand for replenishment will accelerate. It is expected that overseas business will be better in the fourth quarter. On the one hand, the Company promoted the growth of e-commerce business through new products such as "Dun Dun Sofa" and "Qumei Lab Variable Table and Chair" in combination with the construction of online content assets; on the other hand, the Company promoted the upgrading of store image and investment promotion with products such as "2023 New B8","River Bend","Jimu" and "Yang" as the starting point and combined with the window period of offline channel recovery, with good momentum.
In terms of profitability, the gross profit rate and net profit rate of the Company in the first three quarters of 2023 were 31.44% and-7.19%, respectively, compared with-2.81pct and-11.48pct respectively on a year-on-year basis. Among them, the gross profit rate and net profit rate of Q3 quarter were 32.87% and-5.03%, respectively, compared with-1.43pct and-7.88pct respectively. The decrease of profitability of the Company was mainly due to the decrease of income from the beginning of the year to the end of the reporting period, the increase of material cost, impairment loss, interest expense and the increase of exchange loss caused by exchange rate fluctuation. In terms of period expense rate, the company's period expense rate in the first three quarters of 2023 was 37.80%,+8.42pct year-on-year, among which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 20.37%, 8.82%, 2.11% and 6.48% respectively,+3.57pct,+1.15pct,+0.13pct and +3.57pct year-on-year respectively; Among them, the expense rate of Q3 Company was 39.14%,+9.86pct year-on-year, among which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 20.06%, 8.80%, 2.04% and 8.24% respectively,+2.15pct,+1.08pct,-0.01pct and +6.64pct year-on-year respectively.
Investment suggestion
From the industry level: According to the National Bureau of Statistics, the retail sales of furniture above the quota from January to September 2023 increased by +3.1% year-on-year. Under the background of continuous improvement of real estate completion and domestic support for consumption policies such as home furnishing, the home furnishing industry is expected to benefit significantly. From the company level: the overall development momentum of Ekornes overseas subsidiaries is good, accelerating category expansion and Chinese market layout; the domestic business is expected to improve under the overall consumption recovery, and the company actively accelerates innovation transformation; and with the monetary tightening cycle of European and American countries approaching the end, raw material costs and global shipping prices have fallen sharply, etc., the company's profit environment continues to improve. Due to the instability of the current global economic environment and the pressure of domestic demand, we adjusted some of our previous profit forecasts and maintained the previous revenue forecast unchanged. It is estimated that the company's operating income in 23-25 years will be 43.59/52.25/60.63 billion yuan respectively. Adjust EPS0.05/0.50/0.65 yuan for 23-25 years to-0.26/0.43/0.51 yuan respectively, corresponding to the closing price of 5.2 yuan/share on October 31,2023, PE is-20/12/10 times respectively, and maintain the "buy" rating.
Risk hint
1)Mergers and acquisitions integration is less than expected;2) property sales recovery is less than expected;3) industry competition intensifies risks.