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The COVID-19 pandemic caused a surge in export business, and all of a sudden, all the export giants came out and entered the capital market. December 29, China's largest exporter of panel furniture, Huisen Home Furnishing International Group Co., Ltd. (hereinafter referred to as "Huisen Home Furnishing") was officially listed on the Hong Kong Stock Exchange with the stock code 02127.HK and an issue price of HK$1.77 per share. Panel furniture has relatively lower costs and is easy to disassemble and assemble, which can reduce transportation costs. Compared with traditional solid wood furniture, it is more suitable for export sales and e-commerce channels. Huisen Home Furnishing’s products are all assembled furniture, which are fast-moving consumer goods among furniture and are updated and iterated at a faster speed. Huisen Home Furnishing was founded in 2005 and is headquartered in Ganzhou, Jiangxi. After more than 10 years of development, Huisen Home Furnishing mainly adopts the ODM model to deliver products to destinations according to the requirements of overseas customers, and its customers cover more than 60 countries. From 2017 to 2019, its products were exported to more than 55 countries and regions around the world, and in the first six months of 2020, they were exported to more than 30 countries and regions around the world; the United States is Huisen Home Furnishing's main export destination, contributing approximately 70.5% of its revenue in the first six months of 2020 . The largest customer is Wal-Mart. Since 2011, Huisen Home Furnishing has established a long-term and stable business relationship with Walmart, and has even become Walmart's largest and only direct supplier of panel furniture in China. From 2017 to the first half of 2020, Walmart's revenue share reached 19.8%, 22.0%, 23.9% and 24.1% respectively, and the transaction volume increased from 560 million yuan in 2017 to 890 million yuan in 2019, with an annual compound growth rate of 26.1%. It can be said that the product quality is in place, and we have secured a major customer, so we don’t have to worry about long-term orders. Moreover, the identity of Walmart supplier has also helped Huisen Home Furnishing to better acquire other customers. Relying on its strong industrial chain integration capabilities and high-quality customer resources, Huisen Home Furnishing's financial performance has been generally stable in the past few years. Its revenue increased from RMB 2.824 billion in 2017 to RMB 3.719 billion in 2019, with a compound annual growth rate of 14.8%; during the same period, its net profit increased from RMB 335 million to RMB 568 million, with a compound annual growth rate of 30.3%. However, in the first half of 2020, the epidemic suppressed consumer demand, resulting in a 7.0% and 5.6% decrease in its revenue and profit respectively.
Huisen Home Furnishing is a furniture export company with great advantages in product design, production and manufacturing, and supply chain management. The epidemic has caused a significant increase in furniture product consumption in Europe and the United States. Huisen Home Furnishing has also obtained a large amount of financial support through its listing. I believe that it will also strategically consider extending from only serving the B-end to the C-end of cross-border e-commerce. For Huisen, its business structure determines that Huisen Home Furnishing is heavily dependent on overseas markets, especially the US market . How to establish and maintain stable distribution relationships with major retailers in the United States is the key to the long-term development of a company. In addition, as China's production costs continue to increase, competition from panel furniture manufacturers in neighboring regions such as Vietnam is expected to become increasingly fierce, which is also a severe challenge facing Huisen.
(Source: FBA Information)
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