Sofia (002572): Q2 retail chain improvement improved channel adjustment + new product conversion drive growth

Sofia (002572): Q2 retail chain improvement improved channel adjustment + new product conversion drive growth
Investment Highlights The company releases its semi-annual report for 2019: reports that the two companies achieved revenue 31.$ 4.2 billion increased by 5.17%, net profit attributable to mother 3.91 ppm, a five-year increase of 5.96%, net of non-attributed net profit3.48ppm, an annual increase of 0.39%.Of which Q2 had operating income of 19.570,000 yuan, an increase of 12 in ten years.18%, net profit attributable to mother 2.84 ppm, a six-year increase of 6.84%, net of non-attributed net profit2.6.9 billion, a ten-year growth of 7.67%.  The unit price of closet customers has steadily increased, and the proportion of large pieces has continued to increase: (1) Reported that a number of companies’ closets and accessories achieved revenue of 25.480,000 yuan (+2.50%), accounting for 81 of the total revenue.11%; gross profit margin 39.95%, a decrease of 1 from the previous.27pct, mainly due to rising costs, the increase in sales of new products such as environmentally friendly formaldehyde-free Kangchun board; the customer unit price was 10,926 yuan / unit, an increase of 5 over the same period.68%; we estimate a single store income of 96.310,000 yuan (-7.49%), due to upstream passenger flow.(2) As of the end of the reporting period, there were 2646 specialty stores (excluding 166 supermarket stores of 20m2 to 60m2), an increase of 46 from the beginning of the period. The number of stores in provincial capital cities accounted for 17% (revenue 35%)The number of stores in first-tier cities accounted for 29% (33% of revenue), the number of stores in fourth-tier and fifth-tier cities accounted for 53% (32% of revenue), and the channel continued to sink.(3) Dealer channel sales accounted for 85.59%, channel sales accounted for 3 in direct sales stores.09%, the proportion of bulk business channels by 7 in 18 years.99% increased to 10.84%.  Kitchen cabinets continue to exert their efforts, and the loss reduction situation is good: the report shows that the company’s cabinet business achieved revenue3.1.2 billion (+12.35%), short-term increase in gross profit margin2.25pct to 27.57%, net profit -1224.230,000 yuan, a year of loss reduction of 42.91%, performance income showed a steady upward trend compared with the same period last year.At the end of the final reporting period, Smi Cabinets had 837 independent specialty stores, and we estimated that the single store revenue was about 37.250,000 yuan (+2.82%).The daily average production capacity of Simi cabinet factory reached 298 orders / day, an increase of 20 compared with the previous period.65%, the actual capacity utilization rate is 58 on average.22% (48% in the same period last year.twenty four%).  Wooden door dealers’ strategy adjustments have begun to bear fruit, and single-store revenue has grown rapidly: Reporting a series of wooden door business achieved zero revenue.810,000 yuan (+34.16%) and a net profit of -2085.310,000 yuan, a loss of 22 a year.10%, gross margin increased by 5 in the short term.85pct to 10.29%.At the end of the termination period, there were 149 independent wooden door stores in Sofia, and over 150 customized wooden door stores under the Huahe brand. We estimated the single store revenue26.930,000 yuan (+42.twenty four%).The company integrated wooden door products into more Sofia stores, and its operating income and single store revenue increased significantly.  Rich product lines, optimized channels, and large homes steadily landed: (1) In terms of products, the company continued to enrich its product lines in the first half of 19, improved product quality, and proposed a rich product system of light luxury “stars”. At present, Sophia products have reached17 kinds of personalized styles; Simi cabinets developed 9 new cabinets, which distorted the sales of most terminals from low-price packages to profitable products.(2) In terms of channels, Sofia added 80 dealers in the report, 48 new development areas, eliminated and optimized dealers and 36 areas, and reinstalled and upgraded more than 299 stores; meanwhile, the company has encouraged dealers since 2017.Opening Qianping store, as of the end of the reporting period, the company had 176 large home stores, a net increase of 78 compared with the beginning of the period. It is expected that the store opening speed will continue to increase in the second half of the year, improve the linkage of categories, and steadily advance the large home strategy.  Gross profit margin decreased slightly, increasing advertising expenses: Reported consolidated company gross profit margin36.65% (same as minus 1.02pct), the period rate is 22.41% (same increase of 0.33pct).In terms of items, the sales expense ratio increased by zero.84 points to 10.99%, due to vigorous market development and increase in labor costs; the management + R & D expense ratio decreased by 0.73pct to 10.98%; financial expense ratio also increased by 0.22pct to 0.44% was due to the need to increase bank borrowing for production.Taken together, the net profit margin of the first-tier company is 12.44% (decade +0.09pct).  Large-scale growth led to an increase in receivables and changes in operating cash flow: accounts receivable and bills on the period-end account increased by 2 from the beginning of the period.26 ppm to 8.22 trillion, accounts receivable turnover days increased for many years.66 days to 26.62 days, due to the increase in the bulk business project funds; inventory increased by 0 compared with the beginning of the period.100 million to 3.1.3 billion, turnover days decreased by 1 in decades.67 days to 27.In 82 days, the efficiency of supply chain management improved.Report net operating cash flow of core companies 2.2.8 billion, a decrease from the same period last year.04 billion.  Multi-pronged consolidation of competitive advantages, long-term optimistic leader expanded to: Although faced with multiple oppression factors leading to increased revenue growth rate to increase the decline rate, the company successfully broke through new environmental protection products, aggressively promote dealer reform, and enhance the image of terminal storesContinuously improving production efficiency has further consolidated the company’s competitive strength.Based on Sophia’s expected product power and channel power, we believe that follow-up companies are expected to achieve industry integration and increase their share through multi-flowering products and channel strategies.Continue to be optimistic about the long-term development of the company!  Profit forecast and investment grade: We expect to achieve revenue of 80 in 19-21, respectively.49/90.8/101.6.5 billion, an increase of 10.1% / 12.8% / 11.9%; net profit attributable to mother 10.34/11.4/12.7.5 billion, an increase of 7.78% / 10.3% / 11.82%, the current 深圳桑拿网 sustainable corresponding PE is 15.93X / 14.44 times / 12.91X, maintain “Buy” rating.  Risk Warning: Real Estate Expectations Exceed Expectations, Channel Expansion Does Not Meet Expectations

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