02/05/2020

Sofia (002572) 2018 Annual Report Review: Take the initiative to make profit under pressure and focus on long logic under internal practice
Q4 revenue growth slowed down and net profit showed negative growth.2018 initially achieved operating income of 73.1.1 billion, +18 a year.66%; net profit attributable to mother 9 was achieved.59 trillion, +5 for ten years.77%, net profit after deduction to mother 9.1.7 billion, +4 a year.63%.By quarter, Q1 / Q2 / Q3 / Q4 achieved revenue of 12.43/17.45/21.18/22.05 ten percent, +30.32% / + 13.78% / + 20.1% / + 15.42%, the growth rate of revenue in the fourth quarter has dropped noticeably;03/2.66/3.23/2.67 trillion, +30 a decade ago.28% / + 23.61% / + 15.21% /-19.82%, net profit after deduction is 0.97/2.5/3.2/2.500 million, +36.46% / + 18.69% / + 18.94% /-23.29%.Dividends will be distributed to all shareholders for every 10 shares in 20185.00 yuan (including tax), 0 bonus shares (including tax), not converted to share capital with the accumulation fund. The proportion of non-closet categories increased, and Smy’s cabinets turned a profit.In terms of revenue breakdown by product, the proportion of revenue from wardrobes / cabinets / matching furniture / wooden doors was 83.40% / 9.75% / 4.58% / 2.18%, the proportion of non-closet products increased by 1pcpt in 2017.In 2018, Sofia achieved a customer unit price of RMB 10,945 per unit (factory-excluded, excluding Smi cabinets), an increase of 9 per year.89%.In 2018, Smy began to turn losses into profits, entered a profit inflection point, and gradually realized profits. The gross profit margin of cabinets continued to rise, and competition intensified, increasing sales expenses.The company’s highest gross profit margin is -0 in ten years.59pcpts to 37.57%.In terms of products, the gross profit margins of wardrobes / cabinets / furniture accessories / wooden doors were -0.69 / + 4.95 / + 0.16 / -13.73pcpts to 40.03% / 27.98% / 24.63% / 11.79%.Among them, the gross profit margin of cabinets has increased most significantly. The Simi kitchen cabinet factory in Zengcheng has been used. The average daily production capacity of the factory in 2018 was 277 units / day, with an average capacity of 54.3%.The cost rate during the period is +1 per second.85pcpts to 20.25%, of which, the company is committed to advertising and brand image improvement, sales expense ratio +1.16 pieces to 9.58%; the office building and dormitory of Ningxi base and the three-dimensional warehouse of each production base take in and use, depreciation expenses, long-expected booth expenses rise, and management expense rate +0.53 points to 10.35% (considering the adjustment of the R & D opening diameter); in order to speed up cash refunds, the bills receivable formed by the project are discounted and factored, and the financial expense rate is +0.16 pieces to 0.32%.Due to the drop in gross profit margin and the increase in three fees, the net profit margin fell by -1.6 points to 13.12%.At present, the proportion of bulk business accounts for 8% of Sofia. The company’s cash flow is under pressure, and the net cash flow from operations will gradually reach 11 digits, becoming -11.5%. The number of stores opened earlier than expected, the integration of large homes accelerated.By the end of 2018, the number of Sofia’s custom furniture / Smi cabinets / large household products (non-custom) / custom wooden doors was 2510/822/128/98, a net increase of 310/102/33/78, respectively.The cycle is down, and dealers are expected to reduce the impact of opening stores, which is lower than the original plan of 400/300/100/100.In 2019, we plan to replenish 300/100/100/150 stores respectively. At the same time, we will integrate quick cabinets and wooden doors into more Sophia stores to realize integrated home sales.In 2018, the company established 98 large home stores.In 2019, the integration of large homes is accelerating, and 150 large home stores are planned to be launched.In the steady development of channels, the company’s market share in the furniture industry has increased from 0 in 2011.2% steadily increased to 1 in 2018.03%.While ensuring the expansion of market share, the company simultaneously improved the company’s store image. In 2018, the company renovated more than 800 stores; at the same time, it optimized the level of dealers and implemented a selection mechanism of superiority and inferiority.2% to 8%. Actively cultivate internal skills, and digital production and operation have become competitive weapons.In terms of factory layout, Sofia currently has 7 production bases in operation across the country, breaking through the expansion of the customized industry’s production capacity, greatly improving product delivery time, and providing effective support for customer service.In terms of plant efficiency, July 2018, Sofia 4.The 0 workshop was officially put into production in Hubei Huanggang Production Center.Flexible manufacturing effectively improves the company’s production efficiency, so that the quantification of multiple SKUs and efficient production become possible.In 2018, the company launched more than a dozen series of new products to meet the different needs of consumers with a variety of new products.In fact, the company’s inventory turnover rate is +12 per year.83% reached 15.48.In terms of marketing, the company independently developed Sofia’s 3D home display software DIYHome, which realizes fast design and real-time rendering functions, effectively improving store operation efficiency and customer experience.From production to design services, the company realizes the digitization and intelligence of the entire industrial chain, providing customers with more intimate home design and manufacturing services. Investment suggestion: During the industry reshuffle period, companies 北京男士spa会所 will deepen their manufacturing, serve the moat, and take the initiative to actively expand market share.In the long run, the company’s leading advantages continue to expand, running out of the custom home furnishing industry.The company’s EPS for 2019-2021 is predicted to be 1.20 yuan, 1.34 yuan, 1.43 yuan, corresponding PE is 16X, 14X, 13X, maintain “recommended” investment rating. Risk warning: the price of raw materials rises; domestic channel expansion is less than expected; actual sales are lower than expected.