Core views:
Focus on sitting health solutions, leading office chair company. The company's main products are office chairs, massage chair bodies, sofas and leisure chairs. According to the company's annual reports over the years, revenue in 2016-22 rose from 1,402 million yuan to 4,055 billion yuan, with a CAGR of 19.37%; net profit to mother rose from 120 million yuan to 335 million yuan, with a CAGR of 18.64% during the period. Among them, office chairs are the company's core product, accounting for 68.7% of office chair revenue in 2022.
The global market has broad prospects. According to CSIL, the global office chair market capacity in 2019 was US$25.1 billion, driven by emerging markets+work-from-home scenarios. The industry is still in a stage of rapid development, and the market capacity is expected to reach US$37.6 billion by 2026. Currently, overseas warehousing is nearing its end, and the second half of the year ushered in the traditional peak season, and exports are expected to continue to fluctuate and pick up. The company is in the first tier of the office chair industry. The market share is expected to increase further, and market dividends may be released one after another.
Strong R&D is the cornerstone, customer stickiness is the starting point, and the core competitiveness of the enterprise is built. (1) R & D side:
According to Yongyi's annual report, the company spent more than 3% of its revenue on R&D for 12 consecutive years to form a chassis system with adaptive back support technology as the core and seat-back linkage technology. (2) Product side: The lumbar chair ranked first in global sales for three consecutive years. (3) Manufacturing side: fine management, continuous empowerment of intelligent chemical plant construction. (4) Strategic side: Export sales adhere to the “number one number two” strategy, and major customers continue to develop; domestic sales focus on developing independent brands, online and offline two-wheel drive. (5) Production capacity side: Production capacity collaboration between the three production bases in China, Vietnam and Romania to ensure the stability of the global supply chain.
Profit forecasting and investment advice. The company is deeply involved in the seating industry and continues to explore markets in North America, Europe, Asia, Australia, etc. According to the 22-year report, Yongyi has established long-term cooperative relationships with well-known manufacturers such as IKEA, Staples, and OfficeDepot, and is expected to further enhance customer acquisition capabilities in the future. Yongyi Co., Ltd. is estimated to have a net profit of 2.7/3.3/40 billion yuan in 23-25. Referring to comparable company valuations, the company will be given 13xPE in 2024, corresponding to a reasonable value of 12.85 yuan/share, giving it a “buy” rating.
Risk warning. Risk of geopolitical fluctuations. New product development risks. Risk of a decline in overseas demand.