Mercury Home Textiles (603365): Q2 revenue growth rebounded to a high double-digit steady growth below the line, online rebound significantly

Mercury Home Textiles (603365): Q2 revenue growth rebounded to a high double-digit steady growth below the line, online rebound significantly

Both Q2 revenue and net profit growth improved from Q1 in the first half of 2019, and the company achieved operating income of 12.

75 ppm, an increase of 9 in ten years.

93%; net profit attributable to mother 1.

3.5 billion, with an annual increase of 12.

47%; deduct non-net profit 1.

07 ppm, a slight decrease of 2 per year.

23%; EPS0.

50 yuan, 2 yuan (including tax) to be distributed in 10 yuan.

In the context of income 失败:重查growth, the decrease in non-net profit was mainly due to the increase in expense ratio; non-recurring gains and losses were mainly government subsidies and increased investment income, which led to a positive increase in net profit of the mother.

From the single quarter data, 18Q1?
19Q2 revenue growth was 24 each year.

79%, 8.

89%, 8.

72%, 4.

67%, 0.

76%, 19.

64%, the annual growth rate of net profit attributable to mothers is 24.

58%, 15.

55%, 5.

56%, 3.

84%, 4.

22%, 25.


At the end of the fast quarter of single-year revenue growth in 18Q1, due to the high base and e-commerce business, adjustments were still in effect. Revenue growth was at the bottom. The rebound in Q2 revenue growth was mainly due to the adjustment of e-commerce business to resume growth and high baseEffect decay contribution.

Steady offline growth, Q2 speeding up compared to the previous quarter, and online Q2 picking up, with a clear revenue split: In terms of channels, the online revenue share in the first half of 2019 was 36.

52% (slightly lower than 18H1.

35PCT), the income volume is 4.

6.6 billion, with an annual increase of 8.

89%, extrapolated to offline channel revenue 8.

10 ‰, gaining 10 in ten years.


According to quarters: 1) Online Q1’s revenue is every 10% or so, and the company’s e-commerce is still being adjusted everywhere, and there is a high base impact in the conversion of 18Q1 (the company’s e-commerce has been affected since 18Q2).

In Q2, the e-commerce business was adjusted and the growth rate rebounded to about 30%.

2) Offline Q1 revenue growth was high single digits, and Q2 growth rate was increased to double digits.

By the end of June, there were less than 2,700 stores, with a small net increase. Offline revenue growth mainly contributed to same-store growth.

The increase in the expense ratio exceeded the gross profit margin, the inventory turnover slightly accelerated, and the net operating cash decreased to narrow the gross profit margin: the gross profit margin increased by 19H1 and increased by 1.

72PCT to 37.
59%, of which the increase in offline gross profit margin increased by about 3PCT to about 35%, and the decline in online gross profit margin decreased by 1PCT as much as about 41%.

The increase in offline gross profit margin was mainly to supplement the company’s proactive price increase, reorganize the product structure and optimize the contribution of high gross profit products (such as mid-to-high-end products, extreme large single products, etc.).
The decline in online gross profit margin is mainly to reorganize the company’s online sales strategy. Through the Belleness brand to create cost-effectiveness and appropriately reduce the gross profit rate, the rapid growth of the Bellece brand has reduced the online gross profit rate.

Looking at the quarter, 19Q1?

Q2 gross profit margins were 37.

36%, 37.

79%, which is increased by 0 each year.

93PCT, 2.


The company’s online business gross margin was higher than offline. The online business grew rapidly in the second quarter, and the increase in its proportion increased the overall gross profit margin.

Expense ratio: The company’s expense ratio increased during the 19H1 period by 2.

85PCT to 27.


The sales, management + R & D, and financial expense ratios are 20 respectively.

21% (+2.

88PCT), 7.

16% (-0.

07PCT), -0.

35% (+0.

03PCT), among which the increase in selling expenses was mainly due to the increase in advertising expenses and wage expenses.

19Q1?Expense rates increased by 4 during Q2.

32PCT, 0.


Other financial indicators: 1) The total inventory at the end of June 19 was 8.

58 ppm, an earlier increase of 11.


The accrual ratio of the inventory depreciation reserve is from 18H1 to 2.

22% rose slightly to 2.


Inventory turnover fee 0.

97, 0 for earlier 18H1.

96 slightly accelerated.

2) Accounts receivable decreased from the earlier stage4.

51% to 1.

4.1 billion; accounts receivable turnover investment 8.

02, 9 of the earlier 18H1.

28 advantages.
3) Asset impairment losses increase by 75 each year.

89% to 7.37 million yuan, mainly due to increased inventory losses.

4) Investment income increased significantly by 1311.

27% to 10.2 million yuan, mainly due to increased investment income from disposal of transactional financial assets.

5) Net cash flow from operating activities is -1.

1.5 billion, compared with -1 in 18H1.
Net worth of 98 million narrowed.

Among them, the sales of goods gained a ten-year cash appreciation15.

62% to 15.

04 billion US dollars, the scale and growth rate is slightly higher than the income; purchase of goods, accept labor to pay cash for ten years of value-added.

92% to 11.

30,000 yuan, a net increase of 1.

09 million yuan and the scale of inventory increased by 0 earlier and earlier.

8.7 billion is basically the same.

Online business adjustments are in place and we expect continued steady growth in performance. We believe that: 1) The company ‘s online business has been affected by changes in the e-commerce platform since 18Q2 (low-cost social e-commerce platforms have risen rapidly, and online sales of mid-to-high-end home textile products have been affected).The income showed that the company actively adjusted and transformed the e-commerce business, including organizational structure adjustment, front-end group system, marketization in China and Taiwan, entering the new platform, optimizing the brand / product mix, and after a year of adjustment measures were gradually put in place and significantly effective, 18Q4E-commerce sales rebounded initially, short-term adjustment in 19Q1, and recovery of about 30% in 19Q2.

The company’s strategic positioning and operation strategy are clearer. Mercury’s main brand positioning is mid-to-high-end and Belle’s brand positioning cost. Among them, the Mercury brand has won the 618 Tmall platform home textile industry sales for 5 consecutive years.

2) Offline sales maintained steady growth, providing solid support for performance.

3) The company continues to cultivate low-tier cities and online markets with higher growth rates, and its sales share is higher than that of its peers, with a significant growth.

In addition, the company continued to launch the ultimate large single product series, including latex mattresses, cowhide mats, cymbal series kits, etc., which can achieve better sales performance and strengthen the brand image.

4) The company’s sales expenses in the first half of the year broke through, including the increase in advertising costs.

The company hired Sun Yan as the new spokesperson, and at the same time strengthened its brand promotion investment.

Looking at the performance in the second half of the year, offline is expected to continue to grow steadily, and autumn and winter of 19 are expected to increase by about 15% to bring support; online adjustment has been in place and has rebounded significantly, Q3 is expected to maintain a good growth momentum, and focus on Q4 e-commerce peak season growth performance.

The company’s announcement on 8/27/2019 is planned to be scaled to 0 within 12 months after the shareholders’ general election is passed.

100 million yuan to repurchase shares at a price not exceeding 26 yuan / share. The repurchased shares will be used for equity incentives or employee stock ownership plans.

We maintain company 19?
The 21-year EPS is 1.

22, 1.

39, 1.

57 yuan, corresponding to 15 times the 1北京夜生活网 9-year PE, maintain “Buy” rating.

Risk warnings: weak terminal consumption; increased online channel traffic growth, or business adjustment results are less than expected; improper cost control; increased pressure on franchise channel inventory.