The company is a leading overseas enterprise in the light industry category. It also has remarkable product cost performance and quality advantages, and diversifies operating risks through acquisitions, and has deep barriers to foundry business. At the same time, the company is seizing cross-border e-commerce channels and actively laying out platforms such as Amazon and Tik Tok to achieve breakthroughs with cost performance, providing another growth momentum for the company's performance.
Leading office furniture company, big home strategy drives growth. The company has been deeply involved in health seating for 20 years, and its main products include office chairs, sofas, and massage chairs. The company adopts a “big household” strategy, enriches the company's product structure through horizontal acquisitions, extends upstream and downstream of the industrial chain through vertical acquisitions, and enhances the company's competitiveness. The company's foundry business and independent brand business have developed collaboratively, achieving a breakthrough through cost performance. The OEM business has excellent customer resources. Downstream customers include world-renowned retailers such as IKEA, and own independent brands such as “Henglin, LO, Dr. Chef, and NOUHAUS”. In 2022, we achieved operating income of 6.515 billion yuan, with a CAGR of 29.48% in the past five years; net profit to mother of 353 million yuan, and a CAGR of 19.86% in the past five years.
The global production capacity layout is superimposed on the vertical integration of the industrial chain, and the product cost ratio advantages are remarkable; the large household strategy enriches business types, increases revenue sources, and diversifies operating risks. On the production side, the business model integrating industry and trade, global production capacity layout, and raw material collection guarantee product cost performance advantages; on the product side, the company continues to enrich business types through a large household strategy. Currently, the company's cost-effective office chair products are deeply popular. Under the trend of consumer upgrading, functional sofas and system office products have broad prospects. New material flooring is in the stage of increasing penetration rate, and the growth rate is highly deterministic, making up for the risk of a decline in the panel furniture business.
Seize the trend of cross-border e-commerce and break through cost-effective products and differentiated channels. Currently, the cross-border e-commerce industry is booming. Domestic sellers are going overseas strongly, and emerging platforms are developing rapidly. The company set up cross-border e-commerce business in 2019, and the business is currently developing rapidly. On the product side, the products currently being sold by the company are combined with independent production and outsourcing models to strictly control costs and deepen the brand's cost performance advantage; on the sales side, the company has a multi-channel layout based on the Amazon VC channel and enters emerging platforms such as Tik Tok to build brand influence with a first-mover advantage; on the fulfillment side, the company reduces logistics costs while ensuring product delivery speed and further strengthens the company's advantages.
Profit forecast: The company is a leading light industry overseas enterprise, promoting development through endogenous extension. The company's 23E/24E/25E is expected to achieve revenue of 80.71/96.33/11.438 billion, up 24%/19% year-on-year; achieve net profit of 4.55/ 551/651 million, respectively, up 29%/21%/18% year on year; corresponding PE is 13/11/9 times, maintaining a “highly recommended” rating.
Risk warning: risk of exchange rate fluctuations, increased risk of cross-border e-commerce industry competition, risk of impairment of goodwill