Customized furniture midfield battle, expansion, transformation and choice!
On July 21, Sophia announced that it had 0.16 billion percent of the shares of Sofia home in Henan Evergrande. The transaction is handled in the form of mutual offsetting of debts, and there is no need to transfer the actual cash payment. After the transaction is completed, Sophia will own 100% equity in Evergrande Sofia.
With the increasing debt pressure of Evergrande, Sophia, as Evergrande's "excellent supplier", has chosen to cash the debt into the equity of the joint venture company, which is the best choice at present. However, with the continuous spread of Evergrande crisis, Sophia is also facing a reorganization of its development strategy.
With a market value of over 100 billion yuan in Europe and a comprehensive transformation Shangpin Home Collection, Sofia walked to the crossroads, and the midfield war in the customized furniture market gradually entered the most critical moment.
The least bad choice and the most critical choice
in fact, Evergrande's lack of money is no longer the latest news. Evergrande has always maintained the operation mode of high debt, high leverage, high turnover and low cost. Although this is a common phenomenon of housing enterprises, as one of China's ultra-large-scale housing enterprises, its debt scale and debt degree are larger than other enterprises.
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on August 20, 202020, the Ministry of Housing and Urban-Rural Development and the People's Bank of China held a "symposium on key real estate enterprises" in Beijing, which clarified three red lines: the asset-liability ratio excluding the pre-paid accounts should not exceed 70%; the net debt ratio shall not exceed 100%; The cash short debt ratio shall not be less than 1 times.
The proposal of the red line has made Evergrande, which has been able to move rapidly with strong political and commercial relations in previous years, and the space has become more and more aggressive. According to its financial report in 2020, the asset-liability ratio excluding the pre-paid accounts is 83.4%, the net debt ratio is 159.2%, the cash short debt ratio is 0.4, and the debt within one year is as high as 1177.1 billion yuan.
In this case, Evergrande doesn't even know the money of the bank, and suppliers want to get the money is far away.
In 2016, Evergrande signed a contract with the Lankao county government with its small partners such as Sofia, SLEEMON and Qu Mei in the home industry alliance to build the home industry alliance industrial park in the local area with a total investment of 10 billion.
The cooperation mode between Evergrande and the settled enterprises is to set up subsidiaries to operate the industrial park project, and Evergrande Sofia is one of the settled enterprises, which has also achieved profits.
Therefore, Sophia's final choice of stock debt is the least bad choice at present.
Evergrande's dilemma is actually the epitome of China's real estate. With the increase of control measures, real estate will gradually bid farewell to the era of rapid growth, the growth rate of customized furniture's orders from real estate developers will drop visually, and Sophia's next step is crucial.
Under bulk dependency
sofia dilemma
in 2014, Sofia and Evergrande reached strategic cooperation. Since then, the cooperation between the two sides in the field of home furnishing has become increasingly close, especially with the leap forward of China's real estate market, Sophia's performance is almost highly bound to Evergrande.
According to the information disclosed by Sophia, the 340000 sets of production capacity in the first phase of the industrial park project of Evergrande Sophia company in this transaction are mainly supplied to the real estate and regions under Evergrande Group, evergrande also promised to purchase limited products produced by the company.
The benefits of this deep cooperation are obvious, that is, the bulk business on the B side provides huge incremental space for enterprises. In particular, the deep binding with China's real estate overlord not only brings Sofia a stable B- end business, but also provides enough imagination space for its capital story.
The cooperation with Sofia and Evergrande happened at the same time, which was the rising share price of Sofia. With the joint construction of the plant between the two sides in 2017, Sophia's share price also topped 39.246 billion on October 25. On the same day, the market value of oupai was 51.199 billion, Shangpin Home Collection and 18.001 billion yuan.
This prosperity based on the disorderly growth of real estate is only a dream after all. With the gradual introduction of control measures, real estate has been obviously curbed, and Sophia's good days have come to an end. The most obvious thing is the cliff-like decline in revenue growth rate.
The decline of revenue growth rate is not the most serious. The high-leverage operation mode of housing enterprises doomed that they don't have much money in the downward cycle. This pressure will be directly transmitted to the suppliers of household products along with the supply chain.
Especially for Sophia, it is even more miserable. In the top five of Sofia's accounts receivable balance in 2020, Evergrande stood out, reaching 0.188 billion yuan, accounting. And this is already the result of a sharp decline in the proportion.
According to Sophia's financial report, the balance of accounts receivable of Evergrande department in 2018 and 2019 was 0.192 billion yuan, accounting for 44.57%; 0.187 billion yuan, accounting for 25.98%. Accordingly, the turnover days also increased from 15.52 days in 2018 to 33.06 days in 2020.
In the face of this dilemma, it is basically more difficult to reverse the situation. Although the large purchase volume of bulk business severely compresses the profit space of the enterprise, it also digests a large number of capacity scale of the enterprise.
When enterprises want to transform, they often face balance and trade-offs, so this process will take a long time, but the market often does not have much time to wait for you.
In addition to the fact that the incremental space of bulk business caused by real estate is not as good as before, Sophia's dealer system has also been relatively perfect. By 2020, there were more than 4,000 Terminal Stores in Sofia, covering 1800 cities and regions nationwide, while there were only 2856 county-level divisions in China.
Both the bulk business and the laying of terminal stores have basically entered the dilemma of incremental peak. For Sofia, under the condition that the customized furniture market is gradually becoming clear, if no significant changes are made, the peak of revenue is almost visible to the naked eye.
The midfield battle of customized furniture
the time came to 2021. after the baptism of the epidemic, the market pattern of customized furniture gradually became clear.
Oupai home has withstood the test of the epidemic, with a revenue of 14.74 billion yuan, an increase of 8.91% against the trend, and a net profit of 1.935 billion yuan, a year-on-year increase of 15.14%.
With the improvement of the epidemic in March, the stock price of oupai home also pressed the acceleration key at the same time, breaking through hundreds of billions from the low point of 37.2 billion, and finally reaching the high point of 102.6 billion in April this year.
No matter in terms of financial data or market value, the European faction has opened its distance from Sofia and Shangpin Home Collection, and has a subtle trend of occupying the leading position in the industry.
Of course, if the enterprise behind is willing to drink soup, it is not impossible to live. After all, the concentration of the market always has a ceiling, and the mature market can often accommodate 3-5 core enterprises. However, for the custom furniture enterprises that have just passed the brutal growth and their helm, they will not be caught.
Therefore, we can see that after entering 2021, after three years of declining performance growth, falling stock prices, and withdrawal of major shareholders, Shangpin Home collection resolutely chose to fully transform and complete the package.
Li Lianzhu believes that as the real estate dividend subsides, the whole assembly will better meet the redecoration needs of second-hand houses and stock houses, and can also effectively improve the current situation that traditional assembly enterprises are difficult to comply with the regulations, profits and scale expansion.
The financial report is also very face-saving, with net profit of 7.91 million in the first quarter of Shangpin Home collection 2021. since its listing in 2017, **has achieved quarterly profit.
In this case, Sophia will inevitably face the problem of reducing the proportion of bulk businesses and dispersing the risks of bulk businesses after choosing to convert Evergrande's debts into equity.
The following is Sophia's direction problem after getting rid of bulk business dependence, but it did not show strong enough desire for transformation in the annual report of 2020.
In judging the development trend, Sophia believes that the market base of customized furniture is small and the development space is large. With the development of economy, consumers are more and more fond of customized furniture, the track growth rate is significantly higher than the overall level of the furniture industry.
For the development strategy, Sophia will adhere to the established development strategy, focus on the brand strategy of "cabinet customization expert", and deepen the group strategy of "omni-channel + multi-brand + full-product.
Throughout Sofia's 2021 plan, the main new direction may also be assembly. Sophia made it clear in the annual report and the first quarter report that the channels of assembly and home decoration will become the new growth point of the company.
However, Sofia's full-size sales in 2020 was only 74.1731 million yuan, which can only be counted as dragonfly water. In contrast, in the first quarter of Shangpin Home Collection, the revenue of the self-operated package channel was 96.71 million yuan, while that of Sofia was only 39.9071 million yuan.
If you stick to the position of customized furniture and do not make major decision mistakes, another inventory turning may be the digital transformation and the progress of product research and development system, but its research and development investment is also not outstanding.
According to the 2020 financial reports of oupai, Shangpin Home Collection and Sofia, oupai invested 0.699 billion yuan in R & D last year, accounting for 4.74 percent of its revenue; Shangpin Home collection invested 0.246 billion yuan in R & D, accounting for 3.78 percent of its revenue; sofia's R & D investment is only 0.21 billion yuan, accounting for of its revenue.
In any case, after the first 30 years of brutal growth, the custom furniture industry came to a critical turning point.
Under the circumstance that the advantages of the European style are gradually showing and the overall transformation of the Shangpin Home Collection, Sophia is faced with a key choice of its own business direction, and even a key choice that affects the battle trend of customized furniture midfield.
(Article Source: China Wood network, invasion and deletion)
