Industry Competition Intensified Revenue Is Now Down Trend, Andy Lau Endorsed Dream Of Home Want To Enter The Market

From Jiaxing, Zhejiang, the "Meng wooden home, wall panel, cabinet manufacturer" dream house group Limited by Share Ltd (hereinafter referred to as "dream home") disclosed its prospectus on the official website of the securities and Futures Commission in June 12th, which is a step closer to the A share market.

As early as September 2019, the dream house was hired as the IPO guidance broker by Minsheng securities. The counselling plan was divided into three stages. The first stage of the work schedule was July 2019, the second stage work schedule was October 2019, and the third stage work schedule was January 2020.

Dream house main wooden doors, wall panels, cabinets and other customized wooden furniture design, research and development, production and sales. Beginning in 2015, Andy Lau signed the contract as a brand spokesperson, known as "high-end decoration, using dream wood doors", "dream wood works, high-end customization, instant living," and other brand publicity.

In the prospectus, Meng Tian home said that from 2017 to 2019, the company ranked the top three in the domestic household industry for three consecutive years in terms of production scale and market sales volume.

Although the net profit has continued to grow in the past three years, in 2017-2018 years, the dream home revenue has declined, and it plans to land on the main board of the Shanghai Stock Exchange.

Revenue is declining

From the historical perspective, the founder of the dream house is Yu Jingyuan and Fan Xiaozhen.

The prospectus shows that Yu Jingyuan controls the company's voting rights by 75% through the dream sky holding company, and Fan Xiaozhen directly owns 8% of the company's shares. Meanwhile, Yu Jingyuan and Fan Xiaozhen control the voting rights of the company by 10% and 5% respectively through the dream investment and the dream investment. Therefore, Yu Jingyuan and Fan Xiaozhen have direct and indirect voting rights of 98% of the company.

The main product of Meng Tian home is the series of wooden doors, wall panels, cabinets and other furniture products of "Meng Tian" brand, which are jointly built into personalized, customized wooden home.

Among them, wooden doors products accounted for 83.67%, 76.93% and 74.05% of the 2017-2019 year revenue respectively. The proportion of cabinet products corresponding to revenue was 7.69%, 11.54%, 13.31%, respectively, and the proportion of wall panel products corresponding to revenue was 6.32%, 9%, 9.92%.

It is worth mentioning that in 2019, Meng Tian home sold 456 thousand doors.

According to public information, dream house is known as "establishing a strategic cooperative relationship with real estate companies such as Hengda Real Estate and Vanke Real Estate".

However, in terms of performance, in recent three years, although the net profit of dream home has kept increasing year by year, the -2018 revenue is declining in 2017, and the revenue in 2019 is basically the same as that in 2018.

Specifically, in the past 2017-2019 years, its revenues were 1 billion 482 million yuan, 1 billion 345 million yuan and 1 billion 348 million yuan respectively, with net profit of 68 million 899 thousand and 600 yuan, 94 million 240 thousand and 800 yuan and 188 million yuan respectively.

In this regard, Meng Tian home said that the revenue in 2018 was lower than that in 2017. On the one hand, it was affected by the diversification of the hardcover housing delivery policy and the sales channels of the industry, and the retail mode dominated by dealer channels was affected. In addition, in 2017, the company changed all into environmentally friendly waterborne lacquer products, and the initial quality was not stable, which affected the sales expansion of its wooden door products to a certain extent. Besides, industry competition is also one of the factors. With the development of customized home furnishing brands, the market competition of wooden door products has intensified.

It can be seen that Optima, 603833.SH, Sophia, 002572.SZ, 300616.SZ, 603180.SH and other customized home Domain company have entered the field of whole house customization.

Meng Tian home said that by expanding the overall household category and expanding the customer value of a single end customer, 2019 revenue remained stable in 2018.

And 2017-2019 years of net profit growth, dream house said, mainly the main business gross profit growth, as well as the cost reduction in 2019, but also includes advertising and fees and share costs.

However, compared with the listed companies in the same industry, the advertising expenses of dream house are still at a higher level.

Prospectus disclosed that in 2017 -2019, the advertising expenses of high speed rail advertising, Andy Lau endorsement fee, online advertising, red star advertising, airport advertising and publicity activities were 90 million 655 thousand and 300 yuan, 81 million 531 thousand and 500 yuan, 48 million 609 thousand and 700 yuan, respectively, accounting for 6.12%, 6.06% and 3.61% of the revenue share respectively.

Among them, in 2017 -2019, the cost of Andy Lau's endorsement was 17 million 177 thousand and 700 yuan, 10 million 529 thousand yuan and 11 million 843 thousand and 900 yuan respectively.

In contrast, Optima (603208.SH), Sophia, Optima home and Topstrong (300749.SZ), in recent three years (2017 -2019) advertising expenses accounted for 2%-4%, all lower than the dream home.

1038 dealers

From the point of view of sales channels, Meng Tien home is mainly sold through distributors. By the end of 2019, 1038 distributors had been developed, and 1171 franchised stores were located in 31 provinces, autonomous regions and municipalities directly under the central government.

It should be noted that during the reporting period, its dealer channels contributed more than 90% of the company's main business revenue.

Meng Tian home said that the income of Zhejiang sales area, Jiangsu (including Shanghai) sales area, North China sales area and the income level of single dealer occupied the forefront of the whole country in the reporting period. Among them: the average income of the single distributor in the Zhejiang sales area and the Jiangsu (including Shanghai) sales area is the highest in the country, but in 2018 and 2019, the impact of the diversification of the industry sales channels was more obvious; while the real estate market situation of the North China sales area in the radiation surrounding area was better than that of the Beijing benefiting from the central functions of Beijing, resulting in the number and the number of distributors in the sales area. The total volume of imports has shown an increasing trend.

To some extent, the dealer mode determines the relatively decentralized customer structure of dream house.

In 2017 -2019, the total proportion of the top five customers of dream house was 7.69%, 7.2% and 6.14% respectively. Among them, the names of dealers including Keyser, Xu Jiangping, Hu Jianyue and so on appeared frequently. Besides, the A share listed company Jin Tanglang (002081.SZ), the main decoration industry, lived for five consecutive years in the first three years.

In this regard, Meng Tian home said, "Xie Kaize is responsible for the company's five dealers in Shanxi, Taiyuan, Shanxi Jinzhong, Shanxi Yangquan, Shandong Weihai, Hebei Chengde". During the reporting period, the sales revenue of the company is generally relatively stable. Hu Jianyue and Xu Jiangping are responsible for the distribution business of the company in the Chengde, the Hebei and the area, and have been the company's platoon during the reporting period. The top dealer, however, is affected by the changes in the delivery volume of new markets and the intensification of market competition in the local market, and the company has some fluctuations in its sales revenue.

It is worth noting that the application of A shares IPO, dream of home plan to raise funds 980 million yuan, one of its key fund-raising projects is "annual output of 370 thousand sets of flat doors, 90 thousand sets of personalized custom cabinet technology transformation project", its purpose is to enter the real estate market.

However, in the case of the domestic real estate market is becoming more and more stringent, whether the investment projects can achieve the desired results is a big question mark.

In June 15th, a home trade practitioner also told reporters in twenty-first Century economic report: "the domestic whole household industry started late, the advantages and technical capabilities of each enterprise are not obvious, and the degree of homogenization of products is relatively high. How to set up industry standards and create the overall image of the company is particularly important."

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