TikTok launched quickly, and its multi-platform layout opens up room for growth
At present, the company's cross-border e-commerce has formed a channel system mainly based on third-party platforms such as Amazon and TikTok, and the multi-platform layout is expected to open up room for growth. Its brand NOUHAUS has created a number of best-selling products with over 1,000 reviews and over 200 monthly sales on the Amazon platform.
TikTok Shop launched in the US in September 2023. The company is actively deploying, and the expansion of the new platform is expected to contribute to the increase.
The layout of the cross-border e-commerce industry chain has been improved, or has become a key engine for performance growth. In recent years, the company has continuously upgraded its cross-border e-commerce team building, and continued to focus on branding, specialized development, and diversified product matrices, and striving to increase online channel coverage and market share. It is hoped that future e-commerce channels may have more brands to be revealed; in addition, the US overseas warehouse layout has effectively increased the scale effect. We expect cross-border e-commerce to continue to grow rapidly in 24-25.
The ODM business is expected to benefit from the recovery in real estate sales and category exchange in the US. With rich experience in furniture design and manufacturing, timely and stable order delivery guarantees, and high-quality product and service capabilities, the ODM business is expected to establish long-term cooperative relationships with well-known international customers such as IKEA, NITORI, and Office Depot. High-quality customer resources drive the improvement of the OEM brand effect.
Interest rate cuts in 24 are expected to drive a recovery in US housing sales and an increase in home demand. We expect the company's ODM orders to gradually improve as overseas home furnishing retailers progress in inventory removal.
Implement the big household strategy and continue to enrich the category structure
In '22, the company acquired Yongyu Home Furnishing's rich new material flooring product line. In '23, the company's main production base and resources were transferred to Vietnam. The self-built modern and automated factory was fully put into operation, and revenue and profit margins are expected to increase steadily.
Maintain profit forecasts and maintain “buy” ratings
The company's main ODM business is expected to benefit from the recovery in US real estate sales and the upcoming category renewal cycle; Yongyu production line adjustments and steady growth is expected in 24 years; and cross-border e-commerce performance is expected to exceed expectations. We expect the company's net profit to be 4.5/5.5/670 million yuan in 23-25, respectively, and the corresponding PE is 14/11/9X, maintaining a “buy” rating.
Risk warning: Overseas demand recovery falls short of expectations; new cross-border e-commerce platforms are resistant to promotion; risk of declining core customer share, etc.