Overview of events
According to the semi-annual report released by Dongyi Risheng in the first half of 2020, the company achieved 858 million yuan in revenue in the first half of 2020, down 54.00% from the same period last year; the net profit was-246 million yuan, down 297.76% from the same period last year; and the net profit after deducting it was-253 million yuan, down 247.49% from the same period last year. Among them, the operating income of Q1 and Q2 was 1.94 yuan and 664 million yuan respectively, which was-75.69% and-37.82% respectively compared with the same period last year; the net profit of returning to the mother was-2.33 yuan and-13 million yuan respectively, which was-192.68% and-170.56% respectively over the same period last year; and the net profit of deducting non-return was-2.39 yuan and-13 million yuan respectively, which was-166.27% and-178.24% respectively over the same period last year. The decline in performance in the second quarter narrowed, and the impact of the epidemic on the company was alleviated.
Revenue side: the epidemic situation led to the delay of the construction progress of the project site and the decline of engineering business compared with the same period last year.
In terms of business, 2020H1's home decoration income, Seiko decoration income, public equipment income, franchise income, sales, shipping income and service income were 6.90,0.23,1.07,0.04,0.06,0.03 and 25 million yuan respectively, which were-57.93%,-49.55%,-20.13%, + 3.18%,-25.99%, + 4.08% and-17.19% respectively in the first half of the year compared with the same period last year. The company's engineering business is unable to enter the site, and the on-site construction progress is greatly affected, resulting in varying degrees of decline in the company's main business.
Profit end: the profitability of Q2 has improved, and the expense rate has increased significantly during the period.
2020H1 gross profit margin and net profit margin are 30.86% and-27.49% respectively, year-on-year-2.52pct and-25.36pct respectively, of which Q1 and Q2 gross profit margin are 34.17% and 29.89% respectively, + 3.22pct and-5.29pct respectively compared with the same period last year; net profit margins are-122.88% and 0.32% respectively,-113.75pct and-2.76pct respectively. In the second quarter, the net interest rate became positive compared with the previous quarter, the rate of decline narrowed significantly compared with the same period last year, and profitability improved. In terms of period expense rate, 2020H1 company's period expense rate is 60.46%, year-on-year + 25.97pct, in which sales expense rate, management expense rate (including R & D) and financial expense rate are + 14.12pct, + 12.36pct and-0.52pct respectively compared with the same period last year. Sales expense rate and management expense rate (including R & D) have increased more, mainly because the decline of sales and management expenses is less than income.
Positive response, performance is expected to continue to improve.
The company responded actively, vigorously expanding online channels, developing extreme products, improving digital delivery, optimizing capacity layout, etc., to reduce the impact of the epidemic on the company: 1) online channels, in the first half of the year, the company carried out more than 7000 live home improvement marketing on e-commerce platforms such as Fang Holdings Limited American Depositary Shares, SUNING, JD.com, Tmall, Douyin, Bilibili Inc., etc., and promoted the community group purchase model in various branches throughout the country. Attract customers. 2) in terms of products, we initially completed the mid-Taiwan construction of products in the first half of the year, created regionalized products for different regions, and combined with deep supply chain products to develop products suitable for market demand. In the first half of the year, the company designed and developed 40 sets of single space plans and 13 cases in the form of scene; completed the hierarchical system construction of wood products and independently designed and developed 9 series of new wood products, product R & D and upgrading. 3) in the aspect of digitization, it has opened up the upstream and downstream business chain, service chain and data chain, and realized the digital delivery of the whole process of online contract signing, scheme confirmation, collection, acceptance, construction control, after-sales service, etc., and the landing efficiency of digital delivery has been greatly improved. in the first half of the year, the on-time delivery rate of the company's personalized home decoration business was 93%, and customer satisfaction was 96.4%. 4) in terms of production capacity, the exhibition hall of 2000 square meters of factory was completed and put into use in June, and the new location layout of Langfang factory, Shengkeju and Zaozhuang factory was reasonably divided, so as to lay a solid foundation for order delivery after the end of the epidemic.
With the gradual stabilization of the domestic epidemic situation, the project site can enter the construction one after another, the delayed home decoration demand is expected to be met, and the improvement of completion data continues to bring new home improvement demand. The company responded actively in the first half of the year and took a variety of measures to consolidate the foundation, which laid a good foundation for performance improvement in the second half of the year.
Investment suggestion
With the stable epidemic situation, completion data for better, home improvement demand will gradually increase; secondly, the company has sufficient orders on hand, the introduction of war investment XIAOMI technology to expand digital decoration and smart home and other areas, support performance growth, maintain the previous profit forecast, 2020-2022 is expected to return to the mother net profit of 0.14,2.23,254 million yuan, corresponding to 2021 PE is 16 times, to maintain the "buy" rating.
Risk hint
Market competition aggravates the risk; the development of new business is not as expected.