Fuanna (002327): Business adjustment affects short-term performance Concerned about long-term competition and compaction of home textile leaders

Fuanna (002327): Business adjustment affects short-term performance Concerned about long-term competition and compaction of home textile leaders

Net profit fell more than revenue, mainly because the distribution business replaced the company’s release of the third quarter report of 2019 and realized operating income16.

7.7 billion, with an annual downgrade of 4.

88%, net profit attributable to mother 2.

4.6 billion, downgraded by 15.

44%, deducting non-net profit 2.

11 ppm, downgrading by 18 per year.

66%, EPS0.

29 yuan.

The decrease in net profit attributable to mothers is greater than the change in the decrease in distribution business, which is mainly due to the higher net interest rate.

Looking at the quarter, 19Q1?

Q3 single quarter revenue was -5 for half a year.

55%, -1.

76%, -7.

27%, net profit attributable to mothers doubled -16.

32%, -16.

11%, -14.


In 19th, under the weak environment of terminal retail, the company proactively adjusted its business, including helping distributors to remove inventory, promoting the unified call of national terminal POS systems, promoting offline new retail management training and model building, etc., resulting in higher net profit marginBreakthrough in the contraction of the company’s distribution business.

Looking at the split, it is estimated that 1?
In September, the proportion of distribution business was 20% +, which was the top priority for income extension. The revenue from direct sales fluctuated slightly, and online sales maintained 20% + growth.

19H1 company directly operated stores, distribution business, online, other (group purchase, home furnishing, etc.) revenue accounted for about 28%, 23%, 36%, 13%.

Expense ratio rose more than gross profit margin, operating cash flow rose sharply. Gross profit margin: 1 in 19?
The gross profit margin rose in September by 1.

22PCT to 51.


19Q1?Q3 single quarter gross profit margins were 49.

80% (-1.

14PCT), 50.

75% (+0.

34PCT), 54.

64% (+4.

26PCT), the increase in gross profit margin is mainly related to changes in business composition, the main reason for the decline in the distribution business ratio, but at the same time the distribution business expense ratio has increased relatively, the net profit rate has increased, and its decline in proportion has also led to an increase in the expense ratio and an overall net profit rate.
Expense rate: During the period, the expense rate is maximized and increased by 3.

62PCT, of which sales, management + research and development, and financial expense ratios are 29.

29% (+2.

43PCT), 7.

37% (+1.
08PCT), 青岛夜网 0.

16% (+0.


Other financial indicators: 1) Inventory increased by 1 at the end of September 19 earlier.
04% to 8.

33 ppm, a decrease of 16 at the end of September / September.


Inventory turnover fee 0.

98, 1 in the first three quarters of the previous 18 years.

01 was flat and slightly down.

2) Accounts receivable decreased by 78 in the early and early stages.

61% to 0.

80 ppm, a decrease of 57 at the end of September, 2018.

44%, mainly due to receipts at the end of 2018 and 2019; accounts receivable switched weekly to 7.

42, 6 in the first three quarters of earlier 18 years.

88 has accelerated.

3) Net cash flow from operations increased by 339 in ten years.

90% to 6.

40 ppm, of which cash was 23 for goods sold.

12 ppm, an increase of 0 in ten years.

50%, the 北京夜网 cash paid for purchasing goods and receiving labor services is 8.

1.7 billion, with an annual downgrade of 41.

45%, it can be seen that although the company’s operating income has continued to decrease since 2019, the company has strengthened the control of sales receipts, and cash inflows are increasing, replacing the company’s initiative to reduce expenditures such as commodity procurement.

The short-term work focus is to increase payment collection and expand e-commerce business. In 2019, the company’s work focus is on offline business assembly and increase e-commerce development: 1) Strengthen franchisees’ destocking: In 2019, the responsible team in the dealer area will receive payment.For the bonus evaluation indicators, to promote the business team to help dealers to the terminal inventory, to help them improve their profits, at the same time, the company set up a hundred-person channel service team to help dealers to promote information management system operation training, store new retail and other professional skills for the companyThe management innovation of offline channels has laid the foundation.

2) Promote the unification of terminal POS systems across the country: By the first half of 2019, unified access to POS systems in all stores has been completed. The headquarters can monitor the terminal store inventory and sales at any time. The number of offline retail members of the company has reached 66.

60,000, the offline management team broke through the traditional drainage mode, re-established retail thinking, and used the data network to strengthen the store’s radiation effect, with the goal of establishing a standardized membership service process to improve single-store efficiency.

3) Promote the terminal store incentive mechanism, fast product response mechanism, and improve the management competitiveness of direct-operated stores: further integration of channel management, promotion of multi-channel strategy, multi-category development, performance-based adjustment, sales-oriented adjustment, and payment-backed payment, Establish a quick replenishment performance mechanism, dealer reward mechanism, etc.

4) Focus on the development of e-commerce business: In the first half of 2019, the company re-integrated the e-commerce platform operation structure, refined operations on multiple categories of products, and quickly carried out the reform of the e-commerce supply chain. Through the optimization of product structure and integration of platform resources, 19H1 The company’s e-commerce platform sales revenue grows 23% annually.

The home textile leader’s short-term business adjustment and the focus on long-term competitiveness have strengthened us. We believe that: 1) The company has positioned mid-to-high-end “artist spinning” and has established a leading position in the industry. It has adjusted its business against the background of a weak retail environment, focusing on helping franchisees to destock and upgrade uniformlyThe offline system affects the company’s short-term performance (especially the reduction in distribution and sales), but it will help the company and franchisees to continue healthy cooperation and improve terminal operation efficiency in the long term;There are bright spots; 3) The furniture business developed by the company in the early stage is currently relatively small (19H1 household, group purchase and other business income1.

(About 4 trillion, accounting for about 13%), the future will be positioned as light luxury, finished furniture routes, and gradually expand.

The company underestimates the highest dividend payout and the focus expands the most, 16?
The 18-year dividend yield is 1.

49%, 3.

73%, 7.


Considering that business adjustments affect short-term performance, and the retail environment continues to be weak, we cut 19?
The 21-year EPS is 0.

57, 0.

63, 0.
69 yuan, corresponding to 19 times PE for 12 times, downgraded to “overweight” level.

Risk warning: weak consumption, home textile business adjustment is less than expected, and e-commerce business growth is accelerating.