Luolai Life (002293): Improved revenue growth in the second quarter and improved cost rate control during a weak environment

Luolai Life (002293): Improved revenue growth in the second quarter and improved cost rate control during a weak environment
Core point of view In the first half of 19, the company’s operating income and net profit decreased by 0.43% and 5.05%, net profit reduction after deducting non-reduction decreased by 12.26%, of which the company’s operating income and net profit in the second quarter increased by 1.74% and 1.The revenue growth rate was 37%, which was an improvement from the first quarter. Due to the decrease in gross profit margin, the net profit after deductions for the second quarter decreased by 40.47%. Interim results were flat, but earnings and asset quality were relatively better.In the first half of the year, the company’s gross profit margin decreased by more than one.12pct (we think it is more caused by cleaning up the inventory), the cost rate control is better during the period, each time it drops by 2.03pct.At the end of the half year, the company’s accounts receivable increased by 4 compared with the beginning of the year.54%, inventory decreased 5 earlier.11%, the net cash flow from medium-term operating activities increased 887% annually.At the end of the interim period, the company’s net cash on the books was very 上海夜网论坛 abundant, nearly 1.7 billion. We judge that the company’s operation in the second half of the year will be better than the first half.Affected by the high base in the same period of 18 years, the decline of e-commerce platform traffic and the LOVO brand segmentation operation (from July last year), etc., the company’s online and offline sales growth in the first half of the year will be dragged down.We judge that through the high base digestion in the second half of the year, the company’s operations will improve.In the medium term, the trend of concentration of online and offline traffic to the right brand has not changed. As a leading brand in the entire category of home textiles, Luolai is expected to further seize more shares.If the consumption environment improves in the future, the company’s online and offline sales growth will try to stabilize and recover. A clear strategy, 成都桑拿网 sufficient incentives, and improved governance are conducive to the company’s long-term sustainable development.The company’s current strategy focuses on the core business of the Luolai brand, vigorously develops the growth business represented by the LOVO brand and the high-end brand profit business, and actively explores the all-category home furnishing business and embraces omni-channel construction.On the basis of the shares held by some core executives before listing, the company’s continuous rolling incentive plan after listing will ensure the company’s long-term stable and stable growth.In April, Carlyle invested 10% of the equity in the transferee company (considering the cost of holding shares 8 after the dividend conversion).38 yuan / share), Carlyle’s shareholding is conducive to the improvement of the company’s medium- and long-term governance structure, and the replacement also represents foreign recognition of the value of Luolai’s home textile leader. Financial forecast and investment recommendations According to the interim report, taking into account the overall weakness of domestic consumption, we lowered the company’s revenue and gross profit forecasts for the next three years. Taking into account the increase in the company’s equity after the ex-rights, the company’s 2019-2021 earnings are expected to be 0.67 yuan, 0.74 yuan and 0.81 yuan (the original forecast for 19-21 is 0.80 yuan, 0.91 yuan and 1.03 yuan), referring to the average valuation of comparable companies, giving the company a 17-year PE estimate for 19 years, corresponding to a target price of 11.39 yuan, downgraded to “overweight.” Risk warning: the impact of the slowdown of the domestic economy on the consumption of branded home textiles, the possible impact of real estate adjustments, etc.