Luolai Life (002293) 2018 Annual Report and 2019 First Quarterly Report Comments: E-commerce and other business adjustments affect short-term performance
Performance Overview: Revenue growth since the second half of 18, the performance of non-net profit after deduction is better than that of the operating company’s 2018 operating income of 48.1.3 billion, with an annual increase of 3.24%, net profit attributable to mother 5.35 ppm, an increase of 24 in ten years.92%, deducting non-net profit4.32 ppm, an increase of 12 in ten years.69%, EPS0.72 yuan, it is proposed to send 4 yuan (including tax) to 10 shares.The growth rate of non-net profit after deduction is mainly due to the increase in gross profit margin. The growth rate of net profit attributable to mothers is mainly due to the increase in asset disposal income and the increase in government subsidies. By quarter, 18Q1?18Q4 single quarter revenue was extended by 10.75%, 11.01%, 4.46%, -7.98%, net profit attributable to mothers increased by 33.94%, 38.27%, 6.56%, 34.15%.The fastest revenue growth in the second half of 2018 was mainly due to the impact of weak consumption and the company’s active online and offline business adjustments (online main brand and LOVO conversion operations, offline relaxation of franchisee policies, and help to optimize inventory and reduce pickup)The higher increase in Q4 net profit was mainly due to the increase in gross profit margin and the decrease in asset impairment losses. 1Q1 company operating income11.4.4 billion, downgraded by 2.33%, net profit attributable to mother 1.4.5 billion, downgraded by 7.59%, deducting non-net profit1.33 ppm, an increase of 0 in ten years.twenty three%.EPS0.19 yuan.Under the background of a slight increase in non-net profit, the decrease in net profit attributable to mothers was mainly due to the increase in income and the decrease in government subsidies. Revenue sharing: Online and offline business model expansion and adjustment, short-term impact on revenue growth 1) From the perspective of income division, the acquisition of the target Lexington furniture business in 18 years of income1 billion, annual value added 2.21%, infield towel income 1.19 ppm, an increase of 7 in ten years.69% of the main textile industry income 38.8.3 billion, with an annual increase of 3.32%. 2) The home textile business is further segmented online and offline, with an estimated double-digit increase in online revenue in 18 years (the segmentation of the LOVO brand and the main brand began in August 18, and the online growth rate in the second half of the year was affected, which was weaker than the first half), Accounting for more than 20% of the company’s total revenue; offline revenue is estimated to be flat, and long-term overall consumption is weak. The main home textile companies’ revenues in the second half of the year have shown a certain range. The replacement company has helped the franchisees destock by issuing and easing the return policy.The decrease in the actual delivery of franchisees each year also has an impact.In 19Q1, it is estimated that the online business is still affected by the decentralization of the business. It has been flat and slightly increased several times, and it is estimated that the offline has increased slightly. There is also the impact of insufficient pickup by franchisees. Actual terminal retail sales still increased in the first quarter. 3) In terms of channels, as of the end of 2018, the number of channels was close to 2,700. In 18 years, the company merged some of the LUOLAIKIDS stores into the main brand of Rollei, and its caliber was adjusted.The main brand has a net increase of 118 stores in 18 years, of which 77 are large stores of 300 square meters or more. The gross profit margin increased, and the expense ratio increased over the gross profit margin in 19Q1, and the gross profit margin of inventory and cash flow improved: the gross profit margin increased by 18 in 20182.04PCT 45.50% (According to the 18-year report, the 17-year cost is gradually adjusted to 0.29PCT).Among them, the furniture business (LEXINGTON) gross profit margin increased by 4.65PCT to 37.At 96%, the gross profit margin of the home textile business dropped slightly to 0.63PCT to 47.03%. By quarter, 18Q1?19Q1 single quarter gross profit margins were 43.10% (-1.47PCT), 47.89% (+2.44PCT), 40.02% (-3.06PCT), 50.83% (+9.08PCT), 43.88% (+0.78PCT), 18Q4 gross profit margin increased by the current e-commerce business is still under adjustment to affect Q4 e-commerce peak season sales, while e-commerce business gross margin decreased, the proportion decreased, to 17Q4 base replacement (41.75%). Expense ratio: The company’s expense ratio increased by 1 during the 18-year period.77PCT to 32.82%.Among them, sales, management + research and development, and financial expense ratios are 22 respectively.32% (+0.71PCT), 10.49% (+1.64PCT), 0.01% (-0.58PCT), in which the sales expense ratio has been improved, resulting in increased advertising and promotion expenses; the decrease in financial expense ratio is due to the decrease in index expenditure and exchange losses. 19Q1 company’s expense ratio increased to 1.58PCT to 28.64%, of which sales, management + research and development, and financial expense rate +0杭州桑拿网.46, +1.59, -0.47%. Other financial indicators: 1) Inventory at the end of 18 increased by 34 from the beginning of 18.81% to 13.5.7 billion US dollars, increased inventory to retail sales for franchisees under the background of poor retail, loosening the return policy increased the company’s inventory, the replacement of the company’s active reserve of raw materials to control costs, and LOVO and the main brand Luolai online subdivision of the reserve also hasinfluences.Inventory turnover fee 2.22, down from 3 in 17 years.16. Inventory at the end of March 19 was downgraded from the end of 18 by 4.17% to 13.10,000 yuan, 0 for inventory turnover.48, lower than 0 in 18Q1.65. 2) The accounts receivable at the end of 18 years decreased by 0 compared with the beginning of 18 years.81% to 4.77 ppm, basically flat; receivables turnover reset10.05, compared to 12 of 17 years.05 Turnover average. At the end of March 19, it was 15 more than the beginning of 19.93% to 5.5.3 billion, accounts receivable turnover investment 2.22, 2 of the earlier 18Q1.49 is slightly anesthetized. 3) Asset impairment losses increase in value in 18 years and 21 years.63% to 79.76 million yuan, mainly due to inventory price losses and increased losses on financial assets on sale, an increase of 11.85 million yuan and 5.32 million yuan each.19Q1 asset impairment losses increased to 940,000 yuan, 18Q1 was negative. 4) Investment income increased by 116 in 18 years.30% to 100 million US dollars, mainly due to the increase in investment income from the disposal of long-term equity investments;55% to 10.64 million yuan. 5) Net cash flow from operating activities decreased by 73 in 18 years.31% to 1.0.6 billion.Among them, the sale of goods received 58.7.5 billion, with a previous appreciation of 3.02% is equivalent to income; purchasing goods, paying employees, taxes and other cash expenses increased, resulting in a decrease in net cash flow.Earlier in 19Q1, the operating net cash flow turned positive in 18Q1.6.5 billion. Carlyle acquires 10% equity, and strengthens the company’s competitiveness in March 2019. The company announced that CAFabric Investments, which is managed by Carlyle Investment Group (Carlyle Investment Group), signed with the company’s shareholders Shihezi Zhongbang Equity Investment Management Partnership and Mr. Xue Junten”Share Transfer Agreement”, Shihezi Zhongbang transferred its 50 million shares to CA, accounting for 6.63%; Mr. Xue Junteng transferred 25.44 million Luolai Life shares held by him to CA, accounting for 3 of the company’s existing total share capital.37%.After the transfer of the agreement is completed, CA will hold 75.44 million shares of Luolai Life, accounting for 10% of the company’s total issued share capital, and the negotiated transfer price will be 9.62 yuan / share. After the transfer of the agreement is completed, CA will nominate a non-independent director to the company’s shareholders meeting. At the same time, CA has the right to request the directors appointed by it to be elected as members of the special committees of the company’s board of directors based on its own reasonable judgment. The Carlyle Group is a global investment company.As of December 31, 2018, Carlyle Investment Group had approximately 343 investment funds with an asset management scale of approximately US $ 216 billion.Carlyle was founded in 1987 in Washington, D.C., and has grown into one of the world’s largest and most successful investment companies. With more than 1,650 professionals, it provides 31 North American, South American, European, Middle Eastern, African, Asian and American 31 Offices.The Carlyle Group currently invests in four types of assets: corporate private equity, physical assets, global credit and investment solutions.Since 1998, Carlyle Investment Group has begun to lay out the Chinese market, and has invested in elite education, Land Rover car maintenance, JD Logistics, Baidu Finance, Ant Financial and other companies. After a year or so of contact, Carlyle Investment Group agreed with the company’s development strategy and strategic business ideas, and is optimistic about the company’s future development prospects. Through its management of CA Fabric Investments, the transferee shares make long-term value investment and strategic investment in the company.Carlyle’s industry expertise and deep investment resources in the consumer and industrial sectors will help Rollei Life expand its store network, promote standardization of terminal retail management, improve supply chain efficiency and enhance brand value. The completion of this strategic investment will provide a stable and stable basis for the strategic partnership between Carlyle Investment Group and Luolai Life. The company’s transfer of CA Fabric Investments as a strategic investor will also help optimize the corporate governance structure. The short-term business adjustment will continue to affect the sales performance in the second half of the year.15%, net profit attributable to mother increased by 10?20%. We believe that: 1) The company took the initiative to adjust its online and offline business under the background of 18 years of poor retail, including offline proper assistance to franchisees to remove inventory, and the online segmentation of LOVO and Luolai’s major brands clearly affected traffic, etc.Short-term impact on sales growth, but in the medium and long term, it is conducive to improving the quality of operations and a good foundation for sustainable growth. In the future, the company’s brand positioning will be more clear. The main brand, Luolai, will maintain a mid-to-high-end positioning (incorporated into LUOLAI KIDS), and use “super-soft bedding” as an anchor to promote the construction of new retail channels online and in all channels. LOVO is positioned for the mass consumer market.”European emerging designer design” Internet brand, launched the European 100 project (planning to cooperate with 100 designers in Europe to design innovation to meet the consumer demand of young people), in addition to develop potential businesses (creating own and agency high-end home textile brands, upgradingProfit level), explore business (with the Langwan brand and Lexington brand as the group) to explore the carrier of all categories of home furnishing business, and promote the business model of “everyone spinning small homes”.Kitchen, living and other categories extended). 2) The impact of short-term business adjustment is expected to continue, and it is expected to be eliminated initially in the second half of the year.At present, the company has carried out activities related to the tenth anniversary of LOVO, which has been expanded, and the growth rate of e-commerce business has promoted the rebound. 3) Carlyle’s investment in shares fully demonstrates the company’s development potential, industry leader structure, management team quality recognition, and strong alliances. Through Carlyle’s deep experience in the field of consumer goods investment, the company’s operating and management capabilities are expected to improve. 4) The real estate market is picking up. Home textiles, as a post-real estate industry, have a certain correlation, which can bring some incremental benefits to the company’s sales. Considering that the retail environment is still weak and the impact of short-term company business adjustments still exists, we cut the company in 2019?EPS in 2020, increase EPS in 2021 to 0.76, 0.87,1 yuan, corresponding to 14 times the 19-year PE, optimistic about the company’s leading position and after the adjustment of the business income gradually returns to appreciation, maintaining a “buy” rating. Risk warning: weak terminal consumption, lower-than-expected growth in LOVO brand traffic, competition risks in e-commerce platforms, lower-than-expected cost control, and exchange rate changes affecting the performance of LEXINGTON.