Incident: The company released its quarterly report for 2014, achieving revenue of 559 million yuan, +30.66% year over year, and net profit to mother of 121 million yuan, +57.97% year over year.
Comment: Exports continued to recover in the first quarter, and the company took advantage of the momentum to achieve high growth. In 24Q1, China's furniture exports amounted to US$17.469 billion, compared with +12.05%/+4.05%/+7.71% for the same period in '23, '22, and '21 respectively. Meanwhile, US imports from China and Vietnam have shown a recovery trend since '24. In February, furniture imports from China/Vietnam amounted to US$13.14/US$1,022 million, compared with +10.42%/+40.18% (previous value +3.88%/-2.9%). Demand for inventory replenishment is expected to be strong. 89.36% of 24Q1's products were sold to the US. Revenue and net profit to mother all hit record highs for the same period since 2020, +30.66%/+57.97%, respectively, after deducting non-net profit of 113 million yuan, or +82.93% year-on-year.
Excellent profitability and stable cost control. The 24Q1 company's gross margin and net margin were 33.32%/21.64% respectively, +3.30/+3.74pct year-on-year, and the weighted ROE increased 1.15pct to 3.95%.
The fee rate for the period was 2.89%, -2.9 pct year on year. Among them, the 55.89% increase in management expenses was mainly affected by share payments, and the sharp decline in financial expenses was mainly due to an increase in exchange earnings.
Retailer customers and high-end new products MotoLiving are important growth drivers for the company. 24Q1 acquired 24 new retail customers, and total sales to US retailer customers accounted for 58.35% of revenue. Shipments of the new MotoLiving series products began as early as August 23. The retail price of MotoLiving in the US reached 5,000 to 6,000 US dollars/package, and by the end of 24Q1, it had received tens of millions of US dollars of orders from 45 customers. New customers and products are expected to contribute significantly to the company.
Increase investment in market development and brand enhancement to help continue growth. The company's Las Vegas showroom was renovated in January '24, enhancing the brand image. At the same time, the company's publicity within the industry is strengthened through targeted advertising, and it is planned to be more proactive in advertising to users and consumers in the future.
Investment advice: It is expected that the company will continue to grow with high quality under grasping new customers+new products+new brand+new model, and achieve the 24-year equity incentive performance target. We expect the company to achieve net profit of 477/583/721 million yuan in 24-26, corresponding EPS of 3.73/4.55/5.63 yuan/share, respectively, to maintain a “buy” rating.
Risk warning: Demand in the US consumer market falls short of expectations; raw material prices fluctuate greatly; risk of exchange rate fluctuations; risk of falling short of expectations for independent brand expansion; geopolitical risk.