Luolai Life (002293): Inventory reduction, short-term impact on profit, active adjustment and gradual transformation

Luolai Life (002293): Inventory reduction, short-term impact on profit, active adjustment and gradual transformation
Investment points: The company’s performance remained stable, and net profit attributable to mothers decreased by 5% in the first half of the year, basically in line with expectations.1) 19H1 achieved operating income of 21.9 trillion, a slight drop of 0 a year.4%; net profit attributable to mother 2.100 million, down 5 a year.1%, deducting non-net profit 重庆耍耍网 1.700 million, down 12 every year.3%.2) 19Q2 achieved operating income of 10.4 ppm, an increase of ten years.7%; net profit attributable to mothers was 62.79 million yuan, a year-on-year increase of 1.4%, deducting non-net profit of 34.98 million yuan, a year-on-year decrease of 40.5%, mainly due to the decline in gross profit margin from inventory clearance.  Gross profit margin decreased slightly, expenses were well controlled during the period, net interest margin decreased slightly, and asset quality continued to improve.1) Strengthen inventory digestion and increase gross profit margin in 19H1.19H1 gross margin decreased by 1 compared with the same period last year.1pct to 44.2%, mainly due to the company’s active inventory clearance in the first half.19H1 sales expense ratio decreased by 0 compared with the same period last year.From 93pct to 22%, the management expense ratio (excluding research and development expenses) increased by 0 compared with the same period last year.15pct to 8%, net interest rate fell by 0.52 points to 9.8%.2) Asset quality has been continuously improved and operating cash flow is good.19H1 Inventory 12.9 trillion, an earlier decrease of 6935 million, 19H1 accounts receivable reached 5 trillion, an increase of 21.66 million yuan compared with the beginning of the year.19H1 Net operating cash flow2.7 trillion, an increase of 1 over the beginning of the year.600 million, a significant improvement.  Offline channels have been steadily sinking, and online platforms have been actively adjusted.1) Offline channels continue to penetrate to the low line.By the end of 19H1, the company had nearly 2,800 terminal stores. While continuing to consolidate the advantages of the first- and second-tier market channels, it actively penetrated and radiated to the third- 重庆耍耍网 and fourth-tier markets.2) Continuous online adjustments to actively strengthen e-commerce operation capabilities.The company cooperates closely with mainstream e-commerce platforms such as Tmall and Jingdong, and actively covers emerging channels such as NetEase and Yunji, as well as other channels such as TV shopping and WeChat. With active adjustments, e-commerce is expected to gradually recover in the second half of the year.  The brand’s influence has been continuously improved, and the strategy of “everyone spinning a small home” has promoted coordinated development.1) Brand influence ranks first in the industry.According to the results of Nielsen’s annual brand health survey, in the first half of 2019, the Rollei brand’s reputation is 87% and its popularity is 28.4%, ranking first in the industry and second.2) Explosion + community marketing, and constantly expand customer base.In 19H1, offline members increased by 200,000, and active members increased by 80% each year.  3) The furniture business has grown steadily. After adjustment, it promotes coordinated development.19H1 Lexington furniture business achieved revenue4.1 ppm, an increase of 4 in ten years.6%, net profit of 10.25 million yuan, 43% in excess.  The company is a leading enterprise in the home textile industry. It continues to promote the “everyone spinning small home” strategy. The brand matrix integration has expanded and improved, channels have continued to sink, online adjustments have been made, and the “overweight” rating is maintained.The company has multiple brands and multiple gradients covering the entire market, and its brand influence continues to increase.Actively adjust the online layout, which is expected to gradually recover in the second half of the year.  Maintain the sustainable profit forecast. It is estimated that the net profit attributable to mothers will be 5 in 19-21.93/6.77/7.70 trillion, corresponding to EPS.72/0.82/0.93 yuan, PE is 13/11/10 times, maintaining the “overweight” level.

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