Sofia (002572): Growth in the second quarter accelerates the strategy of large homes to bear fruit

Sofia (002572): Growth in the second quarter accelerates the strategy of large homes to bear fruit
Investment Highlights Performance Summary: The company achieved revenue 31 in the first 四川逍遥网 half of 2019.400 million, an annual increase of 5.2%, realizing net profit attributable to mother 3.9 ‰, an increase of 6 in ten years.0%; net profit after deduction is 3.50,000 yuan, an increase of 0 in ten years.4%.  Q2 achieved revenue of 19.60,000 yuan, an increase of 12 in ten years.2%; achieve net profit attributable to mother 2.8 ppm, a six-year increase of 6.8%.Revenue and net profit growth in the second quarter accelerated.  Multi-category efforts, big home strategy achieved results.1) The solid growth of the custom closet business: revenue of 25 in the first half.500 million, an increase of 2 every year.5%; of which Q2 Sophia category income (including OEM furniture) increased by 11 in the previous ten years.6%; 2) Rapid growth of other businesses: cabinets, furniture, wooden doors, and drainage, respectively, to achieve revenue3.One hundred millionth.8 ppm / 0.8 ppm / 0.200 million, an increase of 12 each year.4% / 21.1% / 34.2% / 80.6%, contribution increase; net profit -1224 respectively.20,000 yuan / -2085.30,000 yuan, reducing losses by 42 every year.9% / 22.1%, gross margin is 27.6% / 10.3%, an increase of 2 per year.3pp / 5.9pp.In addition to customized products, the company has released OEM furniture and home furnishings, custom curtains, etc. in Sofia channels, and the joint sales of accessories have increased the unit price of customers.7% reached 10926 yuan / order.  The cost management is reasonable, and the profit margin remains stable: the rise in material costs and labor costs in the first half of the operating costs caused the company’s gross profit rate to decline.0pp to 36.7%, mainly due to the decline in gross profit margin of wardrobe products1.5pp.  In terms of expenses, the company’s period expenses were 22 in the first half of the year.4%, a year to raise 0.3pp, mainly because the company expanded its market development efforts and advertising investment to increase the sales expense ratio by 0.8pp to 11%, the management expense ratio and financial expense ratio are basically stable.In the first half of the year, the company’s large-scale engineering business increased, resulting in an increase in receivables and a decrease in net cash flow from operating activities of the company by more than 31.5% to 2.300 million.Accounts received in advance 5.10,000 yuan, basically the same as last year.In the first half of 2019, the company’s production of sheet metal in the first half of 2019 caused by the company’s production automation information technology has approached 84%, and there is room for further increase. The increase and decrease in fair value gains (subsidiary Hubei Sofia has made progress discounts) has increased the net profit margin by 0.1pp to 12.4%.  Production side and sales side are optimized simultaneously.1) In terms of channels, the sales ratio of distributor channels is 85.6%, direct sales channel sales accounted for 3%.1%, the proportion of bulk business channels is 10.8%.In line with the big home strategy, the big home fusion store has grown rapidly: in the first half of the year, there were a total of 3629 stores, a net increase of 71, of which 2470 (-40) Sofia, 837 (+15) Smy cabinets, and 146 Sofia wooden doors(+18), 176 large home fusion stores (+78).Channel optimization. Sofia added 80 new dealers in the first half of the year, 48 new development areas, eliminated and optimized 36 dealers and regions, dating high-potential, high-growth dealers, and channel optimization was very effective.2) Duration of capacity expansion: The expansion of the use of the Zengcheng Simi cabinet factory in the first half of the year, and the trial production of the Sofia Home Furnishing Factory 南宁桑拿 by Lankao Evergrande. The company currently has 7 production bases in operation across the country, adding a foundation for revenue growth.3) Operational efficiency improvement: The company has implemented fully flexible production in national production bases. The average delivery cycle in the first half of the year was 7-12 days, which marked a significant improvement from last year’s 10-12 days.  Earnings forecasts and investment advice.The EPS for 2019-2021 is expected to be 1.16.1.33, 1.57 yuan, corresponding to 15 times, 13 times and 11 times of PE, maintaining the “buy” level.  Risk warning: terminal sales are less than expected risks; multi-category expansion is less than expected risks.