Mengjie Co. (002397): 2018 New Home Retail Industry’s Steady Growth in New Growth

In the context of the recovery of home textile demand in 2018, the company’s endogenous and outreach efforts continued to strengthen the improvement of product strength and service quality. Revenue from home textile business increased by 27%; however, due to the impact of generous sleep exports, overall revenue increased by 19%.

The effect of expected fee improvement on the profit side is better than that on the income side.

In 2019, the company’s home textile business will actively promote new retail, strong service, and strong systems. It will expand resources and expand the scale online. While sinking through the Mengjie store offline, it will continue to build a full-brand living hall in supplementary channels.,Enhance brand image.

At the same time, generous sleep is gradually expanding through domestic sales channels, and the decline in income is expected to ease.

The merger control fee improvement effect was further released, and it is expected that the profit 北京夜网 elasticity in 2019 will further increase.

At present, the total market value is US $ 4.4 billion, corresponding to 19PE25X, maintaining the level of “Prudent Recommendation-A”.

The main business of home textiles has grown steadily in 2018, and the expected increase in fees will increase the elasticity of net profit attributable to mothers.

In 2018, the company’s operating income / operating profit / net profit / net profit attributable to mothers were 23 respectively.

08 billion / 1.

19ppm / 0.

9.3 billion / 0.

8.4 billion yuan, with annual growth rates of 19.

35% / 22.

90% / 14.

66% / 64.

61%, achieving a profit of 0.

11 yuan, the distribution plan is 1 for every 10 shares.

5 yuan (including tax).

Calculated by quarter, 2018Q4 realized operating income / operating profit / net profit / net 上海夜网论坛 attributable to the mother is 8 respectively.

6.2 billion (+15.

79%) / 850,000 yuan (reversal of losses) / 109.1 million yuan (shortened quotas narrowed) / -1143 (largely reduced quotas).

Under the influence of a high base, the growth rate of the main textile industry in 2019Q1 is expected to be obvious.

2019Q1 revenue / operating profit / net profit / net attributable net profit are 5 respectively.

55ppm / 63.57 million yuan / 56.75 million yuan / 57.29 million yuan, the increase rate was 6 respectively.

94% / 6.

40% /-2.

20% / 12.

58%.

Overall revenue increased by 19% in 2018, surpassing expectations.

1) Sustained endogenous expansion of home textile business drives revenue growth27.

5%, of which single digits of online income dropped to 1.

Above 8 trillion US dollars, accounting for about 8% of revenue; internal business and extension of offline business (net increase of 365 stores in 2018 to about 3300) driven by a 30% + increase in revenue.

2) Generous sleep accounted for a relatively high proportion of foreign trade, and income decreased by the impact of the Sino-US trade war31.

61% to 1.

8.2 billion, generous sleep will shift to domestic sales in the future.

The high base of home textiles and generous sleep disturbances affect the growth of revenue in Q1 2019 by nearly 7%.

Among them, the revenue of home textiles increased by more than 10%. Considering that Q1 is a low season for opening stores, it basically contributed to the same store growth.

Generous sleep income is still presented. The effect of fee control and efficiency improvement has gradually improved, and profitability has increased in 2018. 1) Affected by the increase in home textile promotions, increased terminal discounts, and the decline in generous sleep gross profit margin, the company’s gross profit margin decreased in 2018.

43pct to 42.

75%.

2) The fees are strictly controlled, and the cost rate during the period decreases year by year2.

51pct to 35.

2%, of which the sales expense ratio / management expense ratio / financial expense ratio are -2.

46% / + 0.

25% /-0.

29%, the decline in sales expense ratio was mainly due to the company’s use of information system upgrades to strengthen the refined management of terminal channels and improve the effectiveness of marketing activities.

3) The accrued amount of asset impairment losses in 2018 increased by 27.36 million yuan, mainly due to the increase in impairment losses on sold financial assets (17.27 million yuan), increase in bad debt losses (7.39 million yuan), and impairment of good sleep goodwill (3.68 million yuan)Yuan).

4) Affected by the growth of generous sleep performance, the profit and loss of minority shareholders decreased by 21.28 million yuan in 2018.

In summary, the net profit attributable to mothers increased by 64 in 2018.

61%, significantly faster than revenue growth.

The decrease in gross profit margin in Q1 2019 was greater than the decrease in expense ratio during the period, and the net profit margin decreased slightly.

Affected by factors such as increased terminal promotion efforts, product structure changes, and the rapid development of the low-margin Mengjie store, the gross profit margin dropped8.

09% to 38.

44%, during which the expense ratio fell by 7.

05pct to 26.

2%.

The scale of inventories and accounts receivable increased at the end of 18 years, but there was a downward trend at the end of 19Q1.

Maximize cash flow conditions.

At the end of 2018, the company’s inventory scale reached 7.

$ 8.5 billion, an annual increase of 10.

20%; the size of accounts receivable reaches 4.

1.8 billion, down by 1 every year.

26%.

In terms of cash flow, net cash flow from operating activities in 2018 reached 1.

94 trillion, an increase of 91.97 million a year.

At the end of 19Q1, the company’s operating conditions were benign, and its inventory fell earlier.

48% to 7.

7.4 billion; the size of accounts receivable decreased by 7 compared with the beginning of the year.

7% to 3.

8.6 billion yuan.

Net cash flow from operating activities was 1.

04 trillion, an increase of 1 over the same period of 18 years.

2.6 billion.

In 2019, the company’s strategic focus will be on new retail, strong service, and strong systems to improve profitability and operating efficiency.

1) Distribution of channels and new retail: In 2019, the company will focus on franchising channels, and the stores will sink to cities or communities in the third and fourth tiers and below, with approximately 1,600 Mengjie small stores above 50 square meters.

At the same time, through the “One House Good Goods” platform to strengthen interaction with customers and empower offline channels.

2) Quick wash service layout: “Seven Star Wash” is located in high-end shopping malls on the basis of high-end wash factories, and “I * wash” quick terminal layout to achieve basic coverage of the company’s offline stores. 3) Strengthen information system integration and intelligent upgrades, and implement retail management, supply chain management and internal management systems to improve operational efficiency.

Profit forecast and investment recommendations: In the context of the recovery of home textile demand in 2018, the company’s endogenous and extensional efforts will continue to strengthen the improvement of product power and service quality. The income of home textile business will increase by 27%;19%.

The effect of expected fee improvement on the profit side is better than that on the income side.

In 2019, the company’s home textile business will actively promote new retail, strong service, and strong systems. It will expand resources and expand the scale online. While sinking through the Mengjie store offline, it will continue to build a full-brand living hall in supplementary channels.,Enhance brand image.
At the same time, generous sleep is gradually expanding through domestic sales channels, and the decline in income is expected to ease.

The merger control fee improvement effect was further released, and it is expected that the profit elasticity in 2019 will further increase.

According to recent financial reports and equity incentive performance guidance, the company’s EPS for 2019-2021 is expected to be 0.

22 yuan, 0.

30 yuan, 0.

35 yuan, corresponding to 19PE25X, 20PE19X, maintaining the level of “prudent recommendation-A”.

Risk warning: New businesses such as Mengjie’s small shop and home services are not up to expectations.