Mengtian home also realized that the company has encountered a bottleneck. In this IPO, the company also bet on the whole house customization field, competing with companies such as oupai home (603833. SH) and Sofia (002572. SZ).
However, comparing his own short board with others strengths, how can the recruits of customized home fight in an already competitive battlefield to achieve the goal of rich performance? There must be difficulties ahead.
Cutting down on food and clothing to squeeze profits
Mengtian home furnishing is the top three brand in the field of wooden doors in China, accounting for more than 70% of the companys sales revenue. In 2017-2019, the company ranked the top three in the domestic household industry in terms of production scale and market sales volume of wooden doors for three consecutive years.
Although it has been ranked in the top three, in the extremely scattered field of wooden doors, the market share of dreamtime home furnishings is less than 0.2%.
In addition, Jiangshan oupai (603208. SH) has landed in the capital market, and Tata Mumen is not listed yet.
Market share of dream home
The prospectus shows that in 2017-2019, Mengtian household realized operating revenue of RMB 1.482 billion, 1.345 billion and 1.348 billion respectively, and net profit of RMB 69 million, 94 million and 188 million respectively in the same period.
From the perspective of net profit, Mengtian home furnishing is a high growth company, but from the perspective of revenue, the company failed to achieve effective growth.
Revenue and net profit performance of Mengtian household in recent three years
The gross profit margin of Mengtian household increased from 27.48% in 2017 to 36.92% in 2019, with a sharp increase of 9.44 percentage points in two years. From wooden doors to cabinets, wallboards and other furniture, the gross profit margin of the companys products is increasing.
Jiangshan oupai, which also focuses on wooden door business, has a very stable sales gross margin from 2017 to 2019, at 32.93%, 32.73% and 32.22%.
The reason for the sharp increase in the gross profit margin of Mengtian home is the compression of expenses. All expenses, including sales expenses, management expenses and R & D expenses, have been reduced to a certain extent.
The companys operating cost decreased from RMB 1.069 billion in 2017 to RMB 904 million in 2018 and then to RMB 832 million in 2019. The cost has dropped by more than 200 million in two years.
First, cut down on advertising expenses.
Compared with the industry, Mengtian home is not reluctant to invest in advertising. Especially in 2017 and 2018, the company put more than 6% of its operating revenue into advertising, with an annual investment of nearly 100 million yuan. Similarly, the total advertising and publicity expenses of Jiangshan Europe school, which is dominated by wooden doors, are just over 40 million yuan in the past two years, and the investment in the past two years is less than half of that of Mengtian home furnishing.
More than 6% of this value, compared with the level of about 3.5% of Listed Companies in the customized home furnishing sector, is also on the high side.
Therefore, in 2019, Mengtian household cut down nearly 40% of its advertising investment, which contributed nearly 33 million yuan of net profit margin.
In terms of specific advertising, in addition to Liu Dehuas endorsement of love alone, Mengtian households investment in high-speed rail advertising, airport advertising, online advertising and other channels is shrinking. Liu Dehuas annual endorsement fee is more than 10 million yuan.
Comparison of advertising investment between Mengtian home furnishing and listed companies in home furnishing industry
Projects invested in advertising of Mengtian home furnishing
Second, reduce the number of staff.
In the past three years, the number of employees of Mengtian home furnishings has decreased dramatically year by year. The number of employees from the end of 2017 to the end of 2019 was 4053, 3658 and 3195 respectively. In 2018 and 2019, 395 and 463 people will be reduced respectively, with the annual reduction rate of about 10%.
Tax incentives and government subsidies also play an important role in the profit growth of dreamtime home.
The prospectus shows that from 2017 to 2019, the net profits of the companys tax preferences and government subsidies increased by 6.8811 million yuan, 20.519 million yuan and 28.3265 million yuan, respectively, accounting for 9.99%, 21.49% and 15.10% of the net profits.
It is worth noting that DREAMDAY home is recognized as a high-tech enterprise, enjoying 15% preferential income tax rate from 2017 to 2019. When the prospectus is submitted, the recognition has expired.
The company said that Mengtian home furnishing is preparing for the re evaluation and application of high and new technology. If the company does not meet the recognition conditions of high and new technology enterprises in the future, or the tax preference and government subsidy policies change significantly, it will have a certain impact on the companys business results.
Compared with the net profit, the operating income data of Mengtian household can better reflect the real situation of the company.
The crux of the decline of business income lies in the wooden door business. On the one hand, the reason is related to the downturn of the macroeconomic cycle, on the other hand, there are some own reasons.
The household industry is closely related to the prosperity of the real estate industry. The real estate industry background of real estate is not speculation exists, and the regulatory policies to limit the overheating of real estate have been introduced. The continuous downturn of the real estate market leads to the weakness of the household industry.
At the same time, in recent years, the penetration rate of full decoration of newly-built houses is increasing, and furniture manufacturing enterprises are forced to transform.
However, not all wooden door enterprises are like this. The performance of the listed Jiangshan Europe Group (603208. SH) in the past three years is remarkable. From 2017 to 2019, the growth rate of operating revenue of Jiangshan Europa group was 31.74%, 27.05% and 57.98% respectively; the net profit attributable to shareholders of listed companies increased by 25.76%, 11.03% and 71.11% respectively. In the first quarter of 2020, the net profit of its revenue is also growing.
In the past three years, the sales volume of the main products of Mengtian home furnishings dropped from 646000 in 2017 to 456100 in 2019, down nearly 200000 in two years, with a drop of 30%.
The capacity utilization ratio of the companys door leaf is obviously declining. From 91.32% in 2017 to 63% in 2019.
The main energy sources used in the production of Mengtian home furnishings are electricity, steam and water. The purchase volume of electricity decreased from 37.6446 million kwh in 2018 to 30.2386 million kwh in 2019; the purchase volume of steam decreased from 41100 t to 304 T; the purchase volume of water decreased from 319400 t to 269000 t.
Raise 20 million yuan to ask Andy Lau to speak?
In the project of fund-raising investment, Mengtian home has a customized direction for the whole house. Mengtian furniture plans to raise 980 million yuan, of which 453 million yuan is to be used in the technological transformation project of 370000 sets of flat doors and 90000 sets of personalized customized cabinets annually, and hopes to take this opportunity to enter the refined decoration engineering market.
Project to be invested in the IPO of Mengtian household
At present, it is difficult to determine whether this transformation is worth affirming.
In fact, the whole house custom-made big cake is what all home furnishing enterprises want to eat, but whether they can digest it after eating it hard is another question.
Sofia, the leader of customized furniture, has gone through such a detour.
Sofia, which started with wardrobe customization, adjusted its strategy to cabinet customization expert in March 2020. That is to say, the focus is on the customization of cabinet products, and the rest of supporting products do not focus on development.
Before 2013, Sofia had ambitious to propose a one-stop all category home furnishing strategy of carrying bags and staying in, and hoped to increase the proportion of revenue of wooden doors and cabinets through acquisition and other ways.
After seven years of hard work, Sofia returned to focus on wardrobe customization.
In the scale of production and sales of customized cabinets, there are still many gaps between Mengtian home furnishing and domestic leading enterprises.
For dreamtime home, the layout of multi brand wardrobe customization is not a good move, more like the expediency of IPO. After going public, the investment direction may be changed. It can be seen that how to use this money is still under consideration.
It is planned to invest 350 million yuan in the construction project of Mengtian household brand channel, of which 250 million yuan is planned to be invested in the fund-raising.
According to the plan, 20 million yuan will be used for brand endorsement. If the former spokesperson is used, the money will still be used for artist Andy Lau.
At the same time, the company plans to spend 103 million yuan on advertising, 37 million yuan on media cooperation and 30 million yuan on brand activities within three years.
In addition, the asset liability ratio of Mengtian household is much higher than that of its peers. At the end of 2019, the companys asset liability ratio reached 58.20%, higher than other comparable listed companies in the same period. By the end of 2019, the asset liability ratios of Jiangshan oupai, oupai home furnishing, Sofia and dinggu Jichuang (300749. SZ) were 47.29%, 46.90%, 32.22% and 32.07% respectively.
In 2017 and 2018, the asset liability ratio of Mengtian home was as high as 79.80% and 74.23%. For dreamtime home, the management of dealers is also a problem. By the end of 2019, there were 1038 dealers and 1171 franchised stores in Mengtian home. The distributor channel contributes more than 90% of the companys main business income. The distribution of dealers is a double-edged sword. Its advantage is that it will not rely on a small number of customers, but the risk of dealer management brought by such extreme dispersion as dreamtime home is greatly increased. According to the prospectus, only 6.14% of the sales volume of the top five customers of dream home in 2019. Source: editor in charge of interface news: Yang Qian_ NF4425
For dreamtime home, the management of dealers is also a problem.
By the end of 2019, there were 1038 dealers and 1171 franchised stores in Mengtian home. The distributor channel contributes more than 90% of the companys main business income.
The distribution of dealers is a double-edged sword. Its advantage is that it will not rely on a small number of customers, but the risk of dealer management brought by such extreme dispersion as dreamtime home is greatly increased.
According to the prospectus, only 6.14% of the sales volume of the top five customers of dream home in 2019.