Xilinmen (603008): The formation of the film and television business is a drag on reforms

Xilinmen (603008): The formation of the film and television business is a drag on reforms

Event 1: Xilinmen released the 2018 annual report, and the company’s revenue in 2018 was 42.

110,000 yuan, an increase of 32 in ten years.

11%; net profit attributable to mother -4.

3.8 billion, previously 254 per second.

5%; net profit attributable to non-parents is reduced to -4.

USD 69 trillion, an average of 283% a year; net operating cash flow of -1 was achieved.

3.9 billion US dollars, an average of 154% over the ten years, mainly due to the increase in marketing costs of independent brands.

Among them, Q4 single quarter revenue reached 12.

4.7 billion, an increase of 9 in ten 上海夜网论坛 years.

37%; net profit attributable to mother -5.

98 ‰, 854 in the previous decade.

6%.

Event 2: Xilinmen released the 2019 first quarter report, and the company’s revenue in Q1 2019 was 8.

390,000 yuan, five years average.

57%; net profit attributable to mothers is 23.47 million yuan, an annual increase of 56%; non-net profit is deducted from 18.56 million yuan, which is replaced by 64% annually.

The growth rate of revenue declined month-on-month, and provision for impairment of goodwill affected profit.

The company’s 18Q2 / 18Q3 / 18Q4 / 19Q1 single quarter revenue growth rate was 36% / 30% / 9.

4% /-5.

The growth rate was 6%, which was due to the growth rate of independent brand retail business (-15% in Q4) and the replacement of income from film and television business.

At the same time, the company’s film and television business is affected by market adjustments and policy changes, and plans to make provision for impairment of goodwill2.

890,000 yuan was directly included in the 2018Q4 profit and loss.

If the goodwill impairment reserve is added back, the net profit of the parent is -1.

8 ‰, the average of 163% for ten years, Q4 attributed to the net profit of the mother -3.

1 ‰, a ten-year average of -491%.

Profitability bottomed in 18Q4 and recovered in 19Q1.

The company achieved a gross profit margin of 28 in 2018.

84% (-5.

86 points.

); 18Q4 / 19Q1 single quarter gross margin was 22.

68% / 31.

25%.

The highest net margin for 2018 is -10.

06% (-18.

92 points.

), 19Q1 net profit is 3.

13% (-3.

29 points.

).
We believe that the gross profit margin and profitability must reach at least: 1) the reduction of film and television business (gross profit margin -32%), which is a drag, and 2) the bulk business (gross profit margin) with relatively reduced gross profit margin.

3%) high growth; 3) out-of-control marketing expenses, with an annual sales expense ratio of 22 in 2018.

38% (+7.

85 points.

), High marketing expenses further cut profitability.

In 19Q1, the gross profit margin rebounded markedly, and it is expected that the profitability will further recover.

Independent brands: The retail business is under pressure and the bulk business is growing rapidly.

Earnings of Xilinmen in early 201819.

900 million, an annual increase of 21.

6%, gross margin of 43.

7% (-0.

07 points.

).
Among them, the annual revenue of self-owned brand terminal retail business was 1.5 billion (+ 17%), and the fourth quarter revenue was 4.

4 ‰, 15% on average for ten years.

Hotel business surplus 2.

0.9 billion (+41.

7%), long-term income from real estate engineering business 2.

500 million (+ 155%), high growth in bulk business.

The quality of the extended M & D and Summer Chart operations is good.

M & A and Charto’s annual revenue3.

750,000 yuan, a profit of 43.23 million yuan, taking into account 51% equity, and ultimately contributed 2205 million net profit, good operating quality.

Excluding the impact of consolidation, long-term endogenous income38.

4 ‰, an increase of 20% in ten years, of which Q4 single-quarter endogenous income increased by 7.

2%.

In terms of franchisee channels, the company continued to vigorously introduce “leading” customers, cultivate super customers, and encourage franchisees to open more stores.

In 2018, the company has a total of 580 net increase stores, of which 2020 (+503) Xilinmen stores, 319 (+68) M & D sofa stores and 48 (+9) castle stores.

The foundry business grew at a high speed, and the film and television business became a drag.

ODM / OEM business scale achieved revenue of 17.

US $ 600 million, an annual increase of 41%, and Q4 single-quarter revenue reached 6.

100 million, an increase of 62% in ten years.

Among them, income from export business10.

6.4 billion, an increase of 56% in ten years.

The company’s high-level film and television business achieved zero revenue.

7.3 billion U.S. dollars, an average of 80% over ten years, exceeding 6052 million, dragging on profit formation.

Looking ahead to 2019, we will focus on reforms to improve efficiency and improve business quality.

In 2019, the company will promote organizational reforms internally and implement a collective decision-making mechanism. The establishment of two major committees, the Business Management Committee and the Organizational Management Committee, will assist the company’s operations to complete important company decisions and promote scientific and efficient decision-making.

At the same time, the company will further link expenses with business goals, improve efficiency and business quality.

Investment suggestion: We forecast the company to realize sales income in 2019-21.

3, 51.1, 55.

9 ‰, an increase of 9 in ten years.

85%, 10.

4%, 9.

53%, achieving net profit attributable to the parent company1.

91, 2.

68, 3.

1 ppm, a ten-year increase of -56.

5%, 40.

4%, 15.

8%, EPS is 0.

48, 0.

68, 0.

78 yuan, “hold” rating.

Risk reminder: the real estate boom reduces risk, additional risks in transactions, and increased competition in the industry