Frequent fluctuations in performance, asked Fuanna's main business profitability to be improved
Recently, Shenzhen Fuanna Household Products Co., Ltd. (002327.SZ, hereinafter referred to as "Fu Anna") replied to the Shenzhen Stock Exchange's inquiries about its 2016 performance fluctuations and the surge in accounts receivable. Fu Anna said that performance fluctuations are mainly Due to the weak season of the home textile industry, the franchisees' Spring Festival stocking and revenue recognition policies, and the “Double 11†e-commerce sales and other factors, the surge in revenue was caused by targeted expansion of the credit policy and the establishment of franchisees.
In this regard, the experts interviewed pointed out that the volatility of performance and the surge in accounts receivable are likely to cause problems such as tight capital and pressure on the company. In addition, some analysts pointed out that the erratic performance also hides the factors of insufficient growth of the main business. In recent years, Fuanna’s gross profit margin has dropped, R&D investment has been low, and the big home market including custom furniture has also hinted from the side. The transformation of the home textile industry is difficult.
In this regard, the "China Business News" reporter sent a letter to the relevant departments of Fu Anna, the marketing director Peng Ming replied that the current large home business is still in the investment period, the future home and home textile business will be parallel and development, but now the home Performance is not yet disclosed.
Unstable performance
In recent years, home textile companies have generally shown a swaying performance due to the seasonality of the industry. As the performance of the annual report has grown too sharply in the last quarter, Fu Anna also recently received an inquiry from the Shenzhen Stock Exchange.
It is understood that in 2016, Fu Anna's overall revenue reached 2.311 billion yuan, of which, in the first to fourth quarter of 2016, the company's revenue was 431 million yuan, 450 million yuan, 467 million yuan and 964 million yuan, belonging to shareholders of listed companies. The net profit was 85.80.8 million yuan, 80.852 million yuan, 74.14 million yuan and 196 million yuan respectively. In other words, revenue and net profit for the fourth quarter of 2016 were almost twice that of the first quarter. In addition, at the end of 2016, Fuanna’s accounts receivable balance was RMB 313 million, an increase of 61.22% compared with 2015.
In this regard, the Shenzhen Stock Exchange asked Fu Anna to explain the reason and rationality of the company's fourth quarter 2016 operating income and net profit compared with the other three quarters, as well as the specific reasons for the surge in accounts receivable.
Fu Anna recently replied that due to the influence of the textile industry's weak season, the fourth quarter is the traditional sales season, with the highest share of income and net profit; the franchisee Spring Festival stocking and revenue recognition policy makes shipments faster, according to 11 per year. 60% of the outbound warehouses in December will be estimated, and the franchisees will have a reserve of about 200 million yuan; the “Double 11†e-commerce sales and ordering meeting will also accelerate revenue growth. As for the surge in revenue, it is due to the company's targeted expansion of the credit policy and the establishment of the franchise.
Peng Ming believes that Fu Anna's performance fluctuations are the same as other home textile companies, mainly based on the normal seasonality of the industry. Therefore, there is no need to produce or adopt some transition products and means to conduct reconciliation intervention.
It is worth noting that Fu Anna’s unstable performance continued into the first quarter of 2017. According to the first quarterly report released by Fu Anna in 2017, during the reporting period, the company achieved revenue of 431 million yuan, a growth rate of only 0.06%. The net profit attributable to shareholders of listed companies was 79.308 million yuan, a year-on-year decrease of -10.39%.
In anticipation of changes in company performance, Fu Anna described in the first quarter results forecast: “The net profit attributable to shareholders of listed companies in the first quarter of 2017 is not significantly different from that in the same period in 2016.†The quarterly revenue growth slowed down and the net profit fell year-on-year. Peng Ming admits that this is mainly due to the promotion of the whole house customization business and the increase in the recruitment of company personnel.
Unstable performance is not a good thing in the basic market. The famous economist Song Qinghui pointed out that such a large fluctuation in performance, such as Fu Anna, the surge in accounts receivable is more common in the capital market, which will have a direct negative impact on the company's operations. For example, the surge in accounts receivable of Fu Anna may lead to tight liquidity of the company and may adversely affect the company's daily business development. If the performance is fluctuating, there will be losses and the performance will be under pressure.
The main business is weak and turns to the big home
Some insiders told reporters that the turbulence of corporate performance also shows that the main business has not yet entered the stage of development and maturity, and the follow-up should be strengthened by the main business.
Insufficient growth has also appeared in Fu Anna’s recent changes in gross profit margins. According to public information, Fu Anna's gross profit margin in 2016 decreased by 0.81 percentage points year-on-year to 50.24%. The gross profit margin in the first quarter of 2017 decreased by 0.62 percentage points year-on-year to 50.25%, mainly due to the increase in operating costs. Affected by the increase in cost, the net profit margin in 2016 fell by 0.18 percentage points year-on-year to 18.99%. In the first quarter of 2017, the net interest rate fell by 2.14 percentage points year-on-year to 18.39%.
In addition, the reporter looked through the Fu Anna Annual Report and found that the revenue from its R&D investment did not exceed 1.5% in the past two years. In 2015 and 2016, Fu Anna's R&D investment amount was 30,751,400 yuan and 31,749,400 yuan respectively, accounting for 1.47% and 1.38% of operating income. In 2016, it decreased by 0.09% compared with 2015.
In fact, the home textile industry is no longer the only profitable base for Fu Anna, and the big home is the high ground that it is trying to capture. It is understood that in July 2016, Fu Anna launched the first full-house art Meijia configuration flagship store to start trial operation in Fuanna headquarters in Nanshan District, Shenzhen. The second combined new model store opened in Shenzhen in November 2016. . In 2017, Fu Anna will also plan to start channel expansion, enter large professional home stores, open direct stores, etc. At the same time, Fu Anna also began to engage in foreign investment, build an online platform for Fuanna Home Living, and design companies, real estate companies Cooperation, the introduction of Fuanna's whole house custom model room and other planning, the big home market has gradually become its battleground.
Fu Anna publicly stated to the outside world that the company's business scope has now entered the big home furnishing industry from the original single home textile market. The business map includes four major aspects, from home textiles to home to furniture to overall configuration solutions. Full coverage of the needs of home life. In the later period, Fu Anna will also step up efforts to open up domestic and foreign markets. Through the company's investment in Hangzhou, the overseas market sales network platform will be used to promote silk scarves, home clothes, women's ready-to-wear and other overseas markets.
However, it is worth mentioning that the current profit-making body of the company is still the home textile business such as kits and pillows. According to the annual report, in 2015, the revenue of Fuanna kits, cores and pillows accounted for 52.67%, 31.61%, and 6.29%, respectively, totaling 90.57%; in 2016, kits, cores, and pillows Revenues accounted for 47.80%, 35.43%, and 7.11%, respectively, for a total of 90.34%.
For Fu Anna's current financial statement, the profit subject is still home textile business. Peng Ming said that this situation may still exist in the short term, but with the advancement of the big home strategy, home textiles and home furnishing will be developed in tandem. The two main businesses, in terms of the company's management and profit growth space, will also invest more energy and resources to promote the landing of the big home strategy.
In this regard, Dongguan Securities Researcher Wei Hongmei pointed out that Fu Anna will further promote the strategic transformation of the big home, and it is expected to form a new growth point in the future, but the short-term still belongs to the investment period, so in the end only the investment recommendation to maintain the cautious recommendation rating is given.
Wu Haoliang, secretary-general of Foshan Textile and Garment Industry Association, who is familiar with the textile industry, told reporters that he is not optimistic about the transformation of textile enterprises into the direction of big home. "Home textiles transforms home, it sounds like only one word, but it is actually two concepts. There is not much technical correlation, and there are not many successful cases of transformation.†Wu Haoliang further pointed out that home textile enterprises should devote themselves to their own fields and open up more similar products such as bed sheets, quilts, curtains, etc. It is more secure.
(Original title: High performance fluctuations were questioned. Fuanna’s main business profitability needs to be improved)
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