Main points of the report
To Europe Science and Technology: a cross-border e-commerce leader in the home industry
Zhiou Science and Technology was founded in January 2010, the company is mainly engaged in the research and development, design and sales of own-brand household products, including furniture series, home series, courtyard series, pet series and so on.
The company adheres to its own brand development strategy, and now has three private brands: SONGMICS, VASAGLE and FEANDREA, covering Europe, North America, Japan and other countries or regions. Now it has successfully become one of the household brands welcomed by consumers in Amazon.Com Inc's European and American markets. In the past three years, the company's gross profit margin center has been maintained at about 50%, which is in a leading position in the industry.
Cross-border e-commerce is still in a growth dividend period. "big brand + multi-category + strong operation" is the follow-up development trend. Global e-commerce channel retail sales will reach US $4.28 trillion in 2021, and CAGR is expected to reach 10% in 2020-2024. The high demand of the industry and the good e-commerce ecology of overseas developed countries provide a broad market space for cross-border e-commerce in China. The overall concentration of overseas furniture industry is on the low side.
Driven by the trend of globalization and the upgrading of consumption, head cross-border e-commerce is expected to build a moat by building its own brands, expanding and innovating product categories, and strengthening operational and supply chain capabilities. It is expected that smaller cross-border e-commerce will be integrated or eliminated in the future, and industry concentration is expected to increase.
"Independent brand + product innovation + flexible supply chain" to shape the core competitiveness of European science and technology brand-on the industrial chain, the company actively builds its own brand and focuses on the high value-added areas of the industrial chain. On the basis of combining its own brand, the company focuses on the cross-border e-commerce B2C sales model with few intermediate links and high gross profit margin. In product research and development, the company mainly adopts independent research and development, supplemented by cooperative development; in recent years, the company continues to expand the scene of the whole house, and the development of new products has also won many awards. In supply chain management, the company actively builds flexible supply chain management to achieve multi-link rapid response, and has established a warehousing and logistics system of "domestic and foreign self-operated warehouse + platform warehouse + third-party cooperative warehouse".
Profit forecast and investment suggestion
From 2021 to 2023, we estimate that the company will achieve revenue of 62.05 billion yuan and 918.2 billion yuan respectively, with a net profit of 482 million yuan and 852 million yuan respectively. By selecting listed companies in furniture and cross-border e-commerce industry as a reference for corporate valuation, the weighted average of PE in 2022 is 21.4X. We believe that the company will continue to strengthen the advantages of its own home brand in the future. The cross-border warehousing and logistics system of "domestic and foreign self-management warehouse + platform warehouse + third-party cooperation warehouse" and a collaborative and efficient supply chain system will provide a strong guarantee for the company's development in the medium and long term. Taking into account the company's development prospects and IPO premium, it is estimated that Zhiou Technology PE (2022E) is 25-30X, corresponding to a market capitalization of 157-18.8 billion yuan.
Risk hint
Product innovation is lower than expected; product procurement costs and sea freight prices are higher than expected; industry competition is intensified; exchange rate fluctuations are higher than expected; policy risks are higher than expected; issuance progress is lower than expected.