The company held a 2024 new product launch conference. The company and the China Sleep Research Association jointly released the “2024 White Paper on Mood and Healthy Sleep” and held a new product launch conference to launch the latest technical achievement Mousse Tidal Technology Matrix and the three major products of T11 Pro AI, Champion Dream, and Century Dream Pro to strengthen the brand's mid-range and high-end positioning, accelerate the export of healthy sleep culture, and product upgrades to help the integrated style of play: 1) Continued investment in R&D reflects a forward-looking strategic vision, and high-end AI smart mattresses reinforce the middle and high-end brand positioning.
The R&D cost rate for 2023Q1-3 mousse was 3.5%, an increase of 1 pct over the previous year, and continued investment in R&D. The T11 Pro AI, which is based on “Tidal Technology”, is equipped with AutoFit intelligent adaptation technology and high-precision sensors. Based on extensive ergonomic data, it quickly recognizes signs, adjusts the softness and hardness of the mattress according to the sleeping position, and enables independent adjustment of the left and right zones. Smart mattresses meet consumers' personalized and customized demand trends, and have broad prospects for the age-appropriate direction. Continued research and development in the direction of smart mattresses reflects the company's forward-looking strategic vision. The launch of high-end AI smart mattresses further strengthens the mid-range and high-end brand positioning, and invades the differentiated market. 2) Endorsed by the National Swimming Team, continued efforts to export sleep culture, laying the foundation for the brand to go overseas.
The Champion Dream product was developed in collaboration with the National Swimming Team. Based on in-depth research on athletes' training and sleeping habits, it improves compression relief ability and breathability through material innovation. Champion Dream's new products achieve deep resonance between sleep culture and sports, enrich the sleep culture matrix, and lay the foundation for the brand to go overseas. 3) Package product upgrades to help package play. Compared with the previous generation, Century Dream Pro has upgraded materials, using exclusive materials such as space resin balls and latex imported from Belgian Artilat to improve fit and flexibility. Century Dream is the core item of the package. Mousse continues the package-based style of play. Through product upgrades, it is expected to drive up passenger traffic and customer unit prices.
The mattress industry benefits from trade-in policy catalysis in the short term, and long-term stock refurbishment supports market expansion and intelligence opens up room for growth. In the short term, trade-in policies continue to be introduced. For example, in March 2024, the State Council's “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-In” proposed to promote the exchange of consumer goods in home improvement. Mattress products have a high degree of standardization, and the trade-in policy pushes to solve the problem of recycling bulky items, which is expected to activate potential demand. Looking at the long term, as the public's awareness of sleep health increases, the mattress replacement period is shortened, stock refurbishment supports long-term market expansion, and the impact of the real estate cycle is gradually being eliminated. Furthermore, smart mattresses meet the needs of consumers to improve sleep quality, monitor health conditions, and smart sleeping spaces, but currently the penetration rate is low, racetrack development is still in the early stages, and growth potential is high. In the future, it is expected to develop in the direction of health and old-age care, and become a popular lifestyle medical and rehabilitation product.
The company focuses on the “integrated” development of high-end sleep health products, expanding “two-wing” sofas and V6 large homes, and forward-looking layout of smart mattresses. Mousse's main brand retail is actively transforming, improving the product matrix online, increasing the promotion of short video platforms such as Douyin Kuaishou, and building a content ecosystem for brand public domain traffic; offline marketing changes such as packages to enhance front-end drainage effects, which is expected to drive up passenger traffic and customer unit prices; channel sorting and adjustment will facilitate future multi-series layout, downsizing of exhibition stores, and actively testing the waters for new channels. Sofas and V6 are gradually developing and forward-looking smart mattresses, which are expected to be relayed to become the company's new growth curve.
The company's card is on the domestic mattress gold track, empowering brand value growth in multiple dimensions, consolidating the middle and high-end brand image, building a long-term moat, and gradually extending sofas and V6 households to build new growth drivers in the future. Maintain the 2023-2025 net profit forecast of 813/10.03/1,217 million yuan, with year-on-year increases of 14.7%/23.3%/21.4%, respectively. The current stock price corresponding to 2023-2025 PE is 16/13/10 times, respectively, maintaining the “buy” rating!
Risk warning: Terminal demand is weak, and channel adjustments fall short of expectations.