Main points of investment:
Company announcement: 2021 employee stock ownership plan, to raise 312 million yuan, the total number of shares does not exceed 70 million shares, accounting for 4.3% of the total share capital, the price is the average price of the company's repurchase shares. The employee stock ownership plan has a total of 78 people, including 5 directors, senior executives and other middle, senior and core backbones. Assessment objectives: 50% of the shares are unlocked from 2021 to 2022, the triggered value of net profit is 50.6 billion yuan, and the target value is 5.5 billion yuan, which exceeds the target value to unlock 100% of the shares. If the trigger value is met, more than 90% of the shares will be unlocked (the remaining 10% will be unlocked in proportion to the actual return net profit, etc.).
The employee stock ownership plan shows long-term confidence and motivates the team. The assessment target sets the trigger value and target value, and the overall growth rate is high, reflecting the company's confidence in performance growth; on the other hand, it can effectively mobilize the enthusiasm of the team, stimulate the morale of employees, and unite the interests of the company and management. combined with a number of recent transformation actions of the company, performance growth is expected to accelerate. In addition, the company's compensation system has also changed, introducing a partnership mechanism to stores, giving higher rewards to stores / dealers that exceed their performance targets, and paying more attention to stimulating front-end enthusiasm.
The company's multi-brand and channel strategy continues to advance. 1) Direct marketing to distribution, omni-channel transformation: Meikemei family open direct business model, through the design studio to increase the scope of stores and radiation, designers to achieve complete sales of the whole house, raise the customer unit price. ART split into 4 sub-brands, reduce the opening area, lower the investment threshold, and increase investment efforts. Online channels continue to strengthen accurate digital marketing cooperation with Tencent, flexible use of live broadcast, Xinxuan Mini Program and other channels to enhance brand awareness and incremental channel sales. 2) store adjustment to improve business efficiency. Under the impact of the epidemic in 2020, the company continues to optimize the store structure, eliminate inefficient stores, and adjust the loss-making YVVY and Rehome, which will help the company to improve its overall operational efficiency and resource allocation.
Strategic layout of Ganzhou Nankang, looking forward to reducing costs and increasing efficiency. In the past, Tianjin factory was the company's main production base, but it was in a state of continuous loss with the rise of labor costs. The company will relocate its main production capacity to Nankang, Ganzhou, and the main land in Tianjin will be sold back to the country, retaining only part of the production line of high-end products. Ganzhou Nankang is China's large-scale solid wood furniture production, wholesale and export base, the supply chain is perfect.
After the transfer of the company's production capacity, it will help to reduce costs and increase efficiency, make use of the local industrial chain to improve efficiency, and reduce self-produced redundant SKU;. In addition, there are also preferential policies such as 3 exemptions and 2 halves in taxes.
The combination fist promotes the business transformation, and the employee shareholding shows confidence. In the process of transformation, we will launch a large proportion of shareholding plan, bind the interests of management and the company, and lock in high-quality talents for a long time. It is expected that the company will directly transfer to distribution, accelerate channel expansion, improve product performance-to-price ratio, increase online and offline integration at the marketing end, flexibly use live streaming, Wechat, Tencent and other channels, and transfer the production line to Nankang, Ganzhou, at the cost end, which is expected to reduce cost and increase efficiency. Continue to layout multi-brand strategy, launch small and medium-sized products, optimize household product structure, and deeply tap the potential of supply chain optimization. The company is a scarce high-end household retail brand, from furniture manufacturing, marketing wholesale to retail multi-brand integration, looking forward to the company's future transformation results, re-enter the growth channel. Based on the influence of COVID-19 's epidemic situation, we downgrade the company's EPS to 0.18 yuan in 2020 (originally 0.20 yuan). We are optimistic that in the progress of the company's transformation, we will raise the profit forecast for 2021-2022 EPS to 0.32,0.42 yuan (originally 0.25,0.30 yuan). The net profit of homing mother will be 3.15,5.29 and 678 million yuan respectively, with growth rates of-32%, 68% and 28%, respectively. The current share price is trading at 28 times, 16 times and 12 times valuations, maintaining buying.