Take Advantage Of "Mask Dividend" To Realize The Soaring Performance

On March 18, Sanwen home appliance applied for suspension of listing examination due to updating financial information. Recently, Sanwen household completed the update of its financial information, and its performance soared in the new reporting period. The Shenzhen Stock Exchange resumed its IPO audit according to relevant regulations.

According to the updated prospectus, during the reporting period from 2018 to 2020, Sanwen household achieved business income of 1.081 billion yuan, 1.104 billion yuan and 1.791 billion yuan respectively, and the net profit attributable to the parent company was 69 million yuan, 78 million yuan and 113 million yuan respectively. In 2020, Sanwen's revenue will soar 62.23% year-on-year, and its net profit will increase by 44.87%.

According to the prospectus, Sanwen home is a service-oriented trader with original design as its core, providing home textiles, home clothing and fabric products for medium and large retailers and high-end brands in the world. However, according to the data of 2020, Sanwen household does not contribute the most revenue to the above businesses, and more than 40% of its revenue comes from the sales of medical supplies, especially masks.

"Mask dividend" behind high revenue growth

Comparing the prospectuses before and after the company, it is not difficult to find that the revenue of Sanwen home furnishings will increase greatly in 2020, which is due to the short-term demand for medical products brought about by the epidemic. In 2020, the company's revenue will increase significantly to 1.791 billion yuan, and the net profit attributable to the parent company will exceed 100 million yuan, of which the sales revenue from medical products will reach 740 million yuan, accounting for 41.33% of the revenue, and the gross profit will reach 165 million yuan, accounting for 49.39%.

In recent years, the three main industries of Sanwen home textile, home furnishing and fabric can be described as weak growth in recent years.

From 2017 to 2020, the total revenue of three categories of products of Sanwen home textile, home furnishing and fabric will be 1.077 billion yuan, 1.071 billion yuan, 1.095 billion yuan and 1.045 billion yuan respectively. The company's main business is facing the plight of weak growth.

In 2020, the company's home textile product revenue will decline from 674 million yuan in 2017 to 579 million yuan, the clothing product income will continuously decline to 383 million yuan from 477 million yuan in 2018, and the fabric product income will decline from 99.987 million yuan in 2019 to 83.1688 million yuan.

The medical products such as masks and gloves developed by Sanwen household are more similar to trade business“ The business model is to purchase finished products from suppliers and sell them to the outside world, without design or participation in production. " Three ask home so express.

According to the prospectus, in the first half of 2020, the sales volume of medical products of Sanwen household reached 610 million yuan. In the second half of 2020, the sales volume of medical products of the company decreased to 130 million yuan. The short-term revenue contribution of medical products is amazing, but can this growth momentum be sustained in the long term?

According to its disclosure, the asset impairment loss in 2020 is 45.4557 million yuan, which is mainly due to the price fluctuation of medical products such as masks and gloves held by the company at the end of the period. Considering the factors such as orders in hand, the inventory falling price reserves are withdrawn.

As of the end of March 2021, the on hand orders of Sanwen home care category were 137 million yuan. When Xinguan epidemic situation is under effective control in the world, the demand for medical products will return to the level before the outbreak of the epidemic. There is uncertainty whether the sales scale of medical products of Sanwen household will decline gradually, and whether it will bring loss of falling price.

The "mask bonus" of Sanwen home is no longer, and the main business will return to the three major products of home textile, home furnishing clothing and fabric. At present, the multiple negative effects in the international market have affected the future market operation environment of the company.

Main business faces multiple pressures

Sanwen's products are mainly exported, which is greatly influenced by the international trade situation and the relative cost advantage between countries.

During the reporting period, the company's export revenue was 1.062 billion yuan, 1.022 billion yuan and 1.673 billion yuan respectively, accounting for 98.40%, 92.64% and 93.40% of the revenue respectively. Among them, the revenue from European and American markets was 1 billion yuan, 960 million yuan and 1.55 billion yuan, accounting for 92.59%, 86.80% and 86.37% of its main business income respectively.

The export income of Sanwen household is settled in US dollar and other foreign currencies. The fluctuation of exchange rate will have a great impact on the competitiveness of the company's products in the international market and the company's profitability. During the reporting period, the company's exchange gains and losses due to exchange rate fluctuations were 10.7285 million yuan, 3.0537 million yuan and - 35.2838 million yuan respectively.

Since 2021, the prices of international bulk commodities have risen almost all the way, and the domestic textile raw material market has risen significantly. The spot prices of cotton, cotton yarn and staple fiber have risen all the way, with an accumulative increase of more than 20%. Under the background of soaring raw material prices, downstream textile enterprises are under pressure. If they can not transfer costs, the profit space will be greatly compressed.

In addition, affected by the epidemic situation, international shipping costs have soared since this year, and container prices have soared nearly 10 times, greatly increasing the import and export costs of foreign trade enterprises. Since this year, the trend of RMB appreciation has brought business pressure to foreign trade enterprises again. The triple pressure of appreciation of exchange rate, rise of raw material price and soaring of sea transportation cost has become a difficult problem for many domestic and foreign trade enterprises.

The sales expense rate of Sanwen household products relying on European and American overseas markets in the reporting period has been significantly higher than the average value of comparable companies in the same industry, which are 9.85%, 9.06% and 4.59% respectively in the current period, while the industry average in the same period is 4.19%, 3.95% and 2.33% respectively.

Sanwen home said that the company's sales expense rate during the reporting period was higher than the average level of the same industry, mainly due to the high export proportion of the company, and the corresponding freight and miscellaneous charges and port charges accounted for a relatively high proportion. Under the background of international freight soaring, Sanwen home furnishing may face greater cost pressure in the later period.

In addition, most of the trade settlement between the company and its customers is denominated in US dollars. By the end of 2020, foreign currency deposits accounted for 81.09% of the monetary deposits of Sanwen household, with the amount of up to 202 million yuan, and RMB deposits of 47.296 million yuan, accounting for only 18.91%. If the exchange rate of RMB against US dollar rises sharply in the short term, the company may face no small exchange loss.

During the reporting period, the gross profit margin of the core business products of home textiles, clothing and fabrics of Sanwen household were 20.76%, 22.35% and 15.94% respectively, which had declined due to the fluctuation of exchange rate and the change of customer structure. Under the pressure of the above operating environment, the company's gross profit margin may be further compressed.

In the prospectus, Sanwen household said that as of the end of March 2021, the orders of home textile, clothing and fabrics that the company had fulfilled and in hand were RMB 727 million, and the amount of orders in hand was higher than that in the same period of 2020 and 2019. Sufficient orders provided support for the continuity of the company's business in 2021, and its performance is expected to grow steadily.

Northeast Securities textile and clothing industry analysts told the 21st century economic report reporter that in the current foreign trade situation, foreign trade enterprises are facing a lot of business pressure in hand orders, exchange rate and other factors affecting cost fluctuations, so they may face the risk of loss in order to fulfill the order contract, and they may lose customers and suppliers if they frequently order contracts.

The proportion of original design revenue continues to decline

From the relevant financial data, the original design as the core competitiveness of Sanwen home is obviously insufficient in design and R & D.

Sanwen home believes that it is a service-oriented trader with original design as its core competitiveness, and puts its main resources into the original design and supply chain management links with high added value in the industrial chain. In other words, Sanwen's choice is to reduce independent production and not create its own brand of R & D light assets model.

During the reporting period, the design expenditure of Sanwen household was 10.0447 million yuan, 9.2651 million yuan and 8.8657 million yuan respectively, and the R & D expenses were 6376 million yuan, 2.623 million yuan and 3.8336 million yuan respectively. However, the investment in household design, which regards original design as the core advantage of the company and the cornerstone of customer acquisition, has been declining year by year. The proportion of R & D expenses in revenue is only 0.06%, 0.20% and 0.21% respectively.

Among comparable companies in the same industry, Jiansheng group, which has similar revenue scale with Sanwen household, invested 45.9896 million yuan in R & D in 2020, accounting for 2.91% of revenue. Sanwen household's R & D investment in the same period is even lower than the 0.73% investment level of Wandai clothing which has terminated IPO in 2019.

In 2020, there are only 75 R & D personnel in Sanwen home design, including 11 R & D personnel and 64 designers, which are also lower than 463 of Jiansheng group and 130 of Wandai clothing.

In addition, according to its prospectus, as of the end of 2020, Sanwen home has 30 patents, including 7 invention patents and the rest are utility models, all of which were applied for on or before September 3, 2018. Since September 4, 2018, Sanwen has never applied for a patent.

Sanwen home believes that the company has the advantages of R & D and design, takes original design as the core competitiveness, and has established a design team with high fashion sensitivity, internationalization and diversification, and outstanding development and design ability. It has a deep understanding of the brand design concept and preference of European and American customers, The combination of the design ability to accurately capture fashion trends and consumer preferences and strong fabric R & D capability is the guarantee of the company's products' continuous innovation and creativity.

During the reporting period, the number of basic drawings independently developed and designed by the company for customers each year were 8675, 11817 and 10859, respectively. The company has strong design ability, and the products are favored by foreign customers and recognized by the terminal market.

However, according to its prospectus, during the reporting period, the revenue from original design products provided by the company to the top 10 home textile and clothing customers accounted for 81.65%, 76.95% and 74.77% of the total revenue of the corresponding products to the customers respectively, and the proportion of the revenue contributed by original design continued to decline.

On the other hand, Sanwen household said that during the reporting period, the company adopted the supply chain management mode of customized procurement from cooperative factories. At present, the company has more than 150 long-term cooperative factories. During the reporting period, the sales volume of customized procurement from cooperative factories accounted for 85.90%, 85.39% and 85.43% of the company's current sales volume, respectively. At the same time, the company has four self owned factories in production, which are mainly used to meet the demand of confidential proofing, lean workmanship and flexible production capacity supply.

According to Sanwen household, with the continuous rise of domestic labor costs and the increasing support of Southeast Asian countries for the textile industry, the global textile and garment industry has shown a trend of transferring to Southeast Asia. In line with the trend, the company has started to lay out the Southeast Asian supply chain. If the company's supply chain transfer pace cannot keep up with the industrial transfer speed of the global textile and clothing industry, the company may face a decline in market share.

In this fund-raising, Sanwen household chose to be listed on the domestic growth enterprise board. It plans to raise 534 million yuan to establish a construction project with an annual output of 5.22 million cushions, 4.59 million blankets, 1 million sweaters and accessories, digital design and Exhibition Center project, digital management platform construction project and replenishment of working capital.

As a typical traditional textile enterprise, three questions about whether home furnishing can meet the requirements of gem technology innovation, mode innovation, format innovation or the integration of new and old industries has become the biggest question.

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