The performance in 2020 exceeded our expectations.
The company's revenue in 2020 was 2.22 billion yuan, down 14.7% from the same period last year; net profit was 44.92 million yuan, down 47.4% from the same period last year, corresponding to earnings per share of 0.06 yuan. The performance exceeded our expectations, mainly because the cost control was better than we expected. 4Q20 revenue fell 5.7% from the same period last year, with a net profit of 19.66 million yuan, turning a loss into a profit compared with the same period last year.
The company also announced 1Q21 results: revenue increased by 38.7% year-on-year to 503 million yuan, and net profit increased by 12.5% to 34.41 million yuan, in line with our expectations.
The main business focus of home textile industry turns to the line, and the layout of high-end washing and care is increased. 1) in terms of the main home textile industry, offline sales were affected by the epidemic in 2020, and offline direct sales / franchise revenue decreased by 18% compared with the same period last year, respectively, to 87pm 920 million yuan, and the net clearance of 65,243 direct sales / franchise stores respectively. The company actively distributed online, e-commerce revenue increased 10.4% year-on-year to 430 million yuan, accounting for 19.4% of revenue. 2) in the aspect of home service, the company can improve the ability and efficiency of home care service, increase the consumption frequency of customers, and enhance the stickiness of users.
Under the unfavorable background of the epidemic, generous sleep income has increased and profitability has improved.
Although adversely affected by the epidemic, generous Sleep still achieved an income of 310 million yuan in 2020, an increase of 39.7% over the same period last year, and a net profit of 27.686 million yuan, an increase of 42.3% over the same period last year.
The epidemic has brought about operational deleveraging and a significant reduction in operating cash flow. Year-on-year gross margin in 2020-1.2ppt to 38.9%, direct / franchise / online gross margin year-on-year-0.3/-1.0/-1.2ppt to 48.9 to 31.0%. The total rate of sales, management and R & D expenses increased to 35.5% compared with the same period last year. In terms of working capital, the turnover days of inventory, accounts receivable and accounts payable were + 28, + 5 and + 55 days respectively, resulting in a significant reduction in operating cash flow of 35% to 360 million yuan.
Development trend
In 2021, the company plans to focus on the leading advantages of high-end bedding and create a new high-end brand image of Mengjie. In addition, the company launched stock options and restricted stock incentive programs, and the performance evaluation target of the first exercise / lifting restriction period is not less than 100 million yuan in 2021 and 2022, and the performance evaluation target of the second exercise / lifting period is not less than 200 million yuan in 2023. Incentive targets include some directors, executives, etc., a total of 184people, exercise price 4.08 yuan per share, a total of 4500 million rights and interests, to enhance the cohesion of the core team and the core competitiveness of the enterprise.
Profit forecast and valuation
Maintain the 2020 / 21 EPS forecast of 0. 5%. 10Unix 0.13 yuan, the current share price corresponds to 2021 Universe 22 years 40 Placement 32 times Pmax E. Maintain the neutral rating, taking into account the impact of major shareholder reduction on the valuation level, the target price is lowered by 18% to 4.54 yuan, corresponding to the price-to-earnings ratio of 46 times 2021 Greater 22, which has 12% upside space compared to the current stock price.
Risk
The epidemic continues for a long time, the expansion of stores is not as expected, and the risk of inventory is high.