Furniture Market in China 2012 - Competition, Key Takeaways

8/11/2019 Furniture Market in China 2012 - Competition, Key Takeaways

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April2012


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ExecutiveSummary

Market

Chinas

furniture

industry

has

exhibited

a

rapid

growth

and

development

over

the

past

20

yearsFurnitureindustryisestimatedtobeworthUSD343bnby2015,growingataCAGRof22.8%during200915

Productionvolumehasgrownby8.1%CAGRbetween2010and2011

Drivers: Challenges:

Drivers&

HealthyEconomyandRisingIncome

RealEstateBoom

AcceleratingUrbanizationandChangingLifestyle

FurnitureExpositions

HugeImporterofRawMaterials

StringentHousingMeasures

IntenseCompetitionandRisingOperatingCosts

CredibilityCrisis

a enges StrongDistributionNetwork

ChangingDemographics

RiseinTourism

Government GovernmentStandards

RiseinLuxuryFurnitureDemand

EmergenceofNewerVarietiesofFurniture

Initiatives OldforNewFurnitureSubsidyProgramin2012

IncreasingPresenceofForeignRetailers

OnlinePortalsDedicatedtoFurnitureProducts

MajorPlayers

2FURNITUREMARKETINCHINA2012.PPT

Quanyou Qumei RedApple Huari IKEA Royale


3/26

IntroductionMarketOverview

Global

China

ExportImport

Drivers&

Challenges

GovernmentInitiatives

Trends

Mergers&Acquisitions

Competition


KeyTakeaways


4/26

MajorPublicCompanies Summary(1/2)

30

35

Net Income

SizeoftheBubblerepresentsMarket

CapitalizationinUSDmn

20

25215.3

10

15752.3

0

5

30.9

5

0 50 100 150 200 250 300 350 400

Revenue

RoyaleFurnitureHoldingsLimitedFAVAInternationalHoldingsLimitedMarkorInternationalFurnitureCo.,Ltd.


Note:AllfiguresareinUSDmnforyearending31st Dec2010

MarketCapitalizationfiguresareasof5th Mar2012


5/26

MajorPublicCompanies Summary(2/2)

50 0 50 100 150 200 250 300 350 400

TotalIncome

and

Profit

for

Major

Public

Companies

of

2010

366.6

13.9

USDmn

MarkorInternationalFurnitureCo.,Ltd.

158.7

23.3

oya e urn ure o ngs m e

27.8

3.8

FAVAInternationalHoldingsLimited

NetProfit

TotalIncome


Note:AllfiguresforyearendingDec31st 2010,Industrymayhaveotherkeyplayersaswellinthemarket


6/26

DomesticCompany MarkorInternationalFurniture

Co.,Ltd.

CompanyInformation Locations China

CorporateAddress 506SouthBeijingRoad,Urumqi,

XinjiangUygurProvince,830011China

TelNo. 869913836028

FaxNo. 869913838191

Website www.markorfurniture.com

YearofIncorporation 1995

TickerSymbol 600337

StockExchange ShanghaiStockExchange(SHSE)

KeyPeople

Category Products/Services

HomeFurnishings Beds,DiningCases,DiningTables

and

Chairs,

Dressers,

Occasional

ea quar ers

OtherOffices

ame es gna on

Weiping, Kou Chairman

Jiang, Chen ViceChairmanandGeneralManager

Xin, Huang SecretaryToBoardofDirectorsandDirector

Tables,Sofa



7/26


Co.,Ltd.

F nanc a Snaps ot KeyRat os

Profit/Loss

TotalIncome

366.6400 15

TotalIncome

USDmn

Profit

USDmn

Particularsyoychange

(201009) 2010 2009 2008 2007

ProfitabilityRatios

OperatingMargin 0.31 7.24% 7.55% 6.08% 8.97%

276.5.276.4

0

100

200

300

0

5

10

20092007 2008 2010

NetMargin 1.39 3.79% 2.40% 3.15% 5.28%

ProfitBeforeTaxMargin 0.22 5.73% 5.52% 4.93% 7.27%

ReturnonEquity 0.97 3.94% 2.96% 4.29% 7.56%

ReturnonCapitalEmployed 1.09 6.48% 7.57% 7.95% 12.02%

ReturnonWorkingCapital 0.69 7.04% 7.73% 28.07% 50.33%

ReturnonAssets 0.73 2.47% 1.74% 2.23% 4.95%

FinancialSummary

ThecompanyearnedanetprofitofUSD13.9mninFY2010,as

comparedtonetprofitofUSD6.6mninFY2009

ThecompanyreportedtotalIncomeof USD366.6mninFY2010,

ReturnonFixedAssets 4.21 8.91% 4.70% 6.14% 10.17%

CostRatios

Operatingcosts(%ofSales) 1.25 60.87% 62.12% 67.06% 68.52%

Administration

costs

(%

of

Sales) 1.63 31.88% 30.26% 26.76% 22.58%

Interest costs % of Sales 0.79 1.36% 2.15% 1.78% 1.74%reg s er ngan ncreaseo . over

Thecompanyreportedanoperatingmarginof7.24%inFY2010a

decreaseof0.31percentagepointsoverFY2009

Thecompanyreporteddebttoequityratioof0.59inFY2010,a

decreaseof15.12%overFY2009

LiquidityRatios

CurrentRatio 25.64% 2.29 1.82 1.17 1.33

CashRatio 192.41% 1.04 0.36 0.39 0.18

Leverage

Ratios

Debt

to

Equity

Ratio

15.12% 0.59 0.70 0.92 0.53

FinancialSummary

Indicators Value(05/04/2012)

MarketCapitalization(USD) 752.3 mn

TotalEnterpriseValue(USD) 762.7mn

De ttoCapita Ratio 24.04% 0.21 0.28 0.41 0.21

InterestCoverageRatio 50.01% 5.31 3.54 3.47 5.17

Efficiency

Ratios

FixedAssetTurnover 20.95% 2.35 1.94 1.92 1.92

AssetTurnover 9.64% 0.65 0.72 0.70 0.93

CurrentAssetTurnover 27.48% 1.05 1.44 1.29 2.34


0.04

PERatio(Abs)(11/04/2012) 29.53

Improved Decline

WorkingCapital

Turnover

41.89% 1.86 3.20 8.77 9.50CapitalEmployedTurnover 15.26% 1.04 1.22 1.34 1.43


8/26


Co.,Ltd.

KeyBusinessSegments KeyGeographicSegments

ForeignChina

100%

Furniture

62% 55% 55%

50%

45% 45%38%

20%

40%

60%

80% Thecompanyoperates

throughsinglereportable

segmentnamely,

furniture

KeyRecent

Developments

0%

200920082007

0%

2010

Description News

Overview

Thecompanyisengagedindesigning,manufacturing,sellingandretailingoffurniture

productsinChina

It

runs

~64

retail

stores

in

30

cities

throughout

China,

20

of

which

were

opened

in

2011

ItexportsitsproductstoNorthAmerica,Europe,Asia,Oceania,SouthAmericaandAfrica

ExpansionPlan

Companyplanstosetup100franchiseestoresinChinawithin2013,emphasizingonthe

secondtierandthirdtiercities


overseasmarket


9/26

DomesticCompany BeijingQumeiFurnitureGroup

Corp


CorporateAddress No.11Caixiangdonglu,Nancai

Town,ShunyiDis.,Beijing

TelNo. 861084482501

FaxNo. 861064644493

Website www.qmfurniture.com


ProductsandServices


KeyRecentDevelopments

HomeFurnishings Plywoodbendingandsolidwood

bendingfurnitureincludingsofa,coffee

table,cabinet,dinningset,homeand

officefurniture,bedroomfurniture,

ea quar ers

, escr p on ews

Overview Companyisengagedindesigning,production

andretailingoffurnitureproducts

ItownsproductionlinesinBeijing,therearesix

factorieswhichcoveranareaof80,000sqmt

KeyPeople

Name Designation

ZhaoRuiHai CEO


ume opera es re a s ores

Italso

exports

to

USA,

Japan,

South

East

Asia

andEU


10/26

DomesticCompany ChengduQuanyouFurniture

Co.,Ltd.


CorporateAddress

160JulongRd,WuhouScientific&

TechnicalGarden 610043Chengdu,

China

TelNo. 862885025933

FaxNo. 86

28

8502

5933

Website www.quanyou.com.cn

ProductsandServices



HomeFurnishings MDFfurniture,solidwoodfurniture,

solidwooffurniturewithMDF,veneer

coveringbedroomsets,livingsets

includingdinningset,sofaandmattress

ea quar ers

escr p on ews



Companyhasestablishedfourlargemanufacturing

base,30professionalfactory,20international

sales and service or anizations and o erates more

KeyPeople

Name Designation

YouQuanZhan CEO


than

3000

stores Hassetup3R&DcenterinChengdu,Shenzhen

andItaly

SamStone Sales

Director


11/26

DomesticCompany DalianHuafengFurniture

Co,.Ltd


CorporateAddress

125,2Section,Yan'anRoad,

Zhuanghe,Dalian,Liaoning,116400

China

TelNo. 04118631999

FaxNo. 0411

8613307

Website www.dlhf.com

ProductsandServices



HomeFurnishings Home&OfficeFurniture,DiningRoom

Furniture,LivingRoomFurniture,

BedroomFurniture

ea quar ers

escr p on ews

Overview Companyisengagedindesigning,productionandretailingoffurnitureproductsinChina,JapanandUSA

Itoperates20factories,employing10,000people

KeyPeople

Name Designation

HeYunfen GeneralMana er


Investment In2002,companyhadinvestedUSD482mntobuild

afurniture

industrial

zone

for

USA

market


12/26

DomesticCompany LandbondFurnitureGroupCo.,

Ltd.


CorporateAddress 3Pingdixi,GuangfuRd,Yanbu,Nanhai,

Guangdong,China,528247

TelNo. +8675785768192~199

FaxNo. +8675785781810

Website www.landbondbalta.com


ProductsandServices



HomeFurnishings Middleandhighendsolidwood

furniture,softsofa,mattress,

customizedallcabinet,hotelfurniture,

officefurnitureandetc.

ea quar ers

OtherOffices

escr p on ews

Overview Companyisoneoftheleadingenterprisesengagedindesigning,productionandretailingoffurnitureproducts

Ownsmorethan10whollyownedorsharecontrolledbranchesinChinaandoverseas

KeyPeople

Name Designation

DuZehua CEO


Thedomestic

market

spread

covers

100%

grade

IandIIcitiesandover70%gradeIIIcitiesand

foreignmarketspreadsover90countries

TimothyYang Sales

manager


13/26

ForeignCompany FAVAInternationalHoldings

Limited


CorporateAddress

Room100510thFloorCCWuBuilding

302308HennessyRoad,Wanchai

HongKong

TelNo. 85228388108

FaxNo. 852

2723

8108

Website www.fava.com.hk

. .

TickerSymbol 8108

StockExchange HongKongStockExchange(SEHK)

KeyPeople

Category Brand/Products

Fabricfurniture

roducts

Jixiangniaobrand

ea quar ers

RegionalOffice

Solidwood

furnitureproducts

Huaribrandincludingsofas,

mattresses,homeaccessories,

woodendoors,cabinets,office

ame es gna on

Li, Ge Chairman,CEO

Sun, Miguel ExecutiveDirector

Taminsyah, AbdyBroto ManagingDirector


furniture,hotel

furniture Zhao,

Guo

Wei Executive

Director


14/26


Limited


TotalIncome

Profit/Loss

57.580 20

Profit

USDmn

TotalIncome

USDmn

Particularsyoychange

(201009) 2010 2009 2008 2007

Profitability

Ratios


27.838.4

.

0

20

40

60

20

10

0

10

2010200920082007

NetMargin 26.80 13.71% 40.50% 13.84% 26.32%


ReturnonEquity 32.58 9.67% 42.25% 17.06% 39.13%

ReturnonCapitalEmployed 10.31 10.36% 20.66% 20.12% 34.40%

ReturnonWorkingCapital 66.13 13.95% 80.09% 36.76% 68.84%

ReturnonAssets 20.70 7.58% 28.29% 13.34% 27.29%

FinancialSummary

ThecompanyincurredanetlossofUSD3.08mninFY2010,as

comparedtonetlossofUSD15.54mninFY2009



Cost

Ratios


Administrationcosts(%of

Sales) 4.44 22.34% 26.78% 15.11% 7.44%

reg s er nga ecreaseo . over

Thecompanyreportedanoperatingmarginof14.68%inFY2010an

increaseof5.13percentagepointsoverFY2009

Thecompanyreporteddebttoequityratioof0.27inFY2010,a

decreaseof44.31%overFY2009

CurrentRatio 70.17% 3.52 2.07 2.67 2.96

CashRatio 62.52% 0.39 0.24 0.60 0.70

Leverage

Ratios

DebttoEquityRatio 44.31% 0.27 0.49 0.28 0.43

InterestCoverageRatio 46.33% 4078. 7598.00 10062.3 N.A.

FinancialSummary


MarketCapitalization(USD) 31.0mn


EfficiencyRatios


AssetTurnover 26.51% 0.51 0.70 0.96 1.03

CurrentAssetTurnover 33.82% 0.68 1.02 1.66 1.73

WorkingCapitalTurnover 52.24% 0.94 1.98 2.66 2.61

CapitalEmployedTurnover 37.27% 0.65 1.04 1.23 1.48


0.004

PERatio

(Abs)

Improved Decline


15/26


Limited


PeoplesRepublicofChina(PRC)

EuropeanUnionOthers

UnitedStatesofAmericaIndirectRetailofHouseholdProductsandOthers

DirectRetailofHouseholdProducts

50%

100%

96%100%

2%2%

100% 100%93% 86% 88% 91%50%

100% 14% 12% 9%7%

KeyRecent

Developments

20092008 201020072007 2009 20102008

Description News

Overview

Thecompanyisengagedindesigning,manufacturing,sellingandretailinghousehold

productsinChina,theUnitedStatesandtheEuropeanUnion

It

is

operates

approximately

500

retail

Huari

branded

shops,

including

20

self

owned

stores

and

470

franchisedstores,aswellasaflagshipstore

StrategicAlliances In2007,companyhadacquiredthefurnitureretailbusinessofLangfangHuariFurniture

companyandmanufacturingandfranchisebusinessfromJixiangniaoFurnitureFactory

" " "


Achievements

,

ProductQuality

Around

the

World

and

"China

Top

Brand


16/26

ForeignCompany RoyaleFurnitureHoldingsLimited


CorporateAddress

Room2042ndFloorWingOnPlaza62

ModyRoad,TsimShaTsui,Kowloon

HongKong

TelNo. 85226366648

FaxNo. 852

2635

0389

Website www.hkroyal.com

TickerSymbol 1198

StockExchange HongKongStockExchange(SEHK)

KeyPeople


Homefurnishing Panelbasedandsolidwood

products,sofas,

upholstery

and

ea quar ers

RegionalOffice

ame es gna on

Tse, KamPang CoFounderandChairman

Ma, MingFai CEOandExecutiveDirector

Lam, Toi CoFounderandDeputyChairman

mattresses


Jim,

Pang Chief Financial

Officer


17/26



TotalIncome

Profit/Loss

201.2300 40

TotalIncome

USDmn

Profit

USDmn

Particularsyo

ychange

(201110) 2011 2010 2009 2008

Profitability

Ratios


.116.6

108.8

0

100

200

20

0

20

2010 20112008 2009

. . . . .


ReturnonEquity 1.63 14.84% 16.47% 20.96% 19.79%

Returnon

Capital

Employed

2.87 13.48% 16.35% 19.08%

4.67%

ReturnonWorkingCapital 1.93 59.42% 57.49% 79.74% 1027.22

%

Return on Assets 2.29 9.94% 12.23% 14.96% 11.60%

FinancialSummary

ThecompanyearnedanetprofitofUSD29.4mninFY2011,as

comparedtonetprofitofUSD23.3mninFY2010



Cost

Ratios


Administrationcosts

(%

of

Sales) 0.17 15.45% 15.62% 18.29% 33.31%

reg s er ngan ncreaseo . over

Thecompanyreportedanoperatingmarginof15.84%inFY2011an

increaseof0.95percentagepointsoverFY2010

Thecompanyreporteddebttoequityratioof0.19inFY2011,an

increaseof42.16%overFY2010

. . . . .

LiquidityRatios

CurrentRatio 2.36% 1.84 1.88 1.73 0.97

CashRatio 5.04% 0.80 0.84 0.76 0.48

LeverageRatios

Debtto

Equity

Ratio 42.16% 0.49 0.35 0.40 0.71

FinancialSummary


MarketCapitalization(USD) 215.3mn


DebttoCapitalRatio 87.47% 0.15 0.08 0.04 0.02

InterestCoverageRatio 46.06% 31.88 59.11 79.60 7.00

EfficiencyRatios


AssetTurnover 17.48% 0.67 0.82 1.02 1.02


0.04

PERatio

(Abs)

(11/04/2012) 7.56

Improved Decline

. . . . .

WorkingCapital

Turnover 4.96% 4.03 3.84 5.45

90.37

CapitalEmployedTurnover 8.53% 1.01 1.10 1.43 1.74


18/26



100% 100%

PeoplesRepublicofChina(PRC)

20%

40%

60%

80%

Manufactureand

Sales

of

Home

Furniture100%

20%

40%

60%

80%

100%

Thecompanyoperates

throughsingle

reportable

segmentnamely,Peoples

RepublicofChina(PRC)

KeyRecent

Developments

2011 2011

Description News

Overview

ThecompanyisprincipallyengagedinthemanufacturingandtradingoffurnitureinChina

Itsproductsaresoldthroughfranchiseesandalsothroughstoresoperatedbythemunderthebrand

nameRoyalFurniture

Itoperatesmorethan2,500 stores

With300,000sqmover5advanceproductionfacilities,Royalhashighlydiversified&highvolume

manufacturingcapabilities

InOct2011,companyhadsecuredaUSD51.50mnsyndicatedloanfacilitywithanumber


,

plantsand

new

retail

shops

in

China


19/26

ForeignCompany IKEAGroup


CorporateAddress Bargelaan20,Leiden,NL2333CT,

Netherlands

TelNo. (3171)05657100

FaxNo. N.A.

Website www.ikea.com


RegionalOffice


HomeFurnishings Desks,Kidsfurniture,Kitchen

furniture,Bathroomstorage,KeyPeople

Bedsandmattresses,Chairs,

Clothesstorage,smallstorage,

Sofas&armchairs,Storage

furniture,Tables,TVstands&

mediasolutions Toolsandfittin s

ame es gna on

MikaelOhlsson CEOandPresident

GranGrosskopf Chairman



20/26

ForeignCompany IKEAGroup

Description News

Com an isen a edinretailin offurniture roductsinChina


Overview AsofAug2011,companyhadninestoresinlocationssuchasBeijing,Shanghai,

Guangzhou,

Chengdu,

Shenzhen,

Nanjing,

Dalian

and

Shenyang DuringFY2011,businessfromChinaamountedtoUSD7.7bn,upby20%yoy

StrategicAlliances

,

NewstoreswillbedevelopedinWuxi,Jiangsuprovince,andthemunicipalityofTianjinin

2012

Companyplans

to

build

aasecond

store

in

Beijing,

athird

outlet

store

in

Shanghai

and

a

new store in Nin bo in Zhe ian rovince in 2013

CompanyhasobtainedasiteforitsthirdstoreintheChangpingdistrictofnorthern

BeijingandisalsoconsideringtoopenasecondstoreinGuangzhouby2015

IKEAalsohaveplanstoexpandingitsstaffbasebytripleamountwithin2015



21/26

ForeignCompany RedAppleFurnitureCo.,Ltd.


CorporateAddress

Unit24,1/F,BlockB,ShatinIndustrial

Centre,57YuenShunCircuit,Shatin,

NewTerritories,HongKong

TelNo. +85226371081

Fax

No. +852

26373293Website www.redapple.pl

ProductsandServices



HomeFurnishings Livingroom,bedroom,dinning,office,

accessories,whiteoakfurniture

ea quar ers

RegionalOffice

escr p on

ews



Ithasbeeninvestingextensivelyforbringingin

newtechnologiesandequipmentfromGermany,

KeyPeople

Name Designation

NamChunLam Marketin Mana er


,

Itcovers

an

area

of

more

than

100,000

sq

mt,

employing2500people


22/26

Introduction

Market

OverviewDrivers&Challen es

GovernmentInitiatives

Mergers&Acquisitions

KeyTakeaways


F it k t i t d t t CAGR f 22 8% t


23/26

FurnituremarketisexpectedtogrowataCAGRof22.8%toreachUSD343bnby2015

Furnitureindustry

has

evolved

in

terms

of

types

of

furniture

produced

in

order

to

meet

varying

consumerpreferencesthroughoutChina

Opportunitiesinthe MarketSize Government

Healthyeconomyalongwith

risingincome,urbanization

ar et In t at ves

Governmenthas

been

takingsomemajor

initiatives for the

343.0

288.3

234.8

191.2155.7200

300

400

USDbn

22.8%

andboomingrealestate

sectoractsasadriverforthe

growingdemandoffurniture

inthe

country

developmentoffurniture

sector

Therearevarious

126.8100.0

0

100

2015e2014e2013e2012e201120102009

Challenges

Regularfurnitureexhibitions

andstrongdistribution

networkprovidessales

governmentstandardsto

ensurethesafetyand

qualityofproductsinthe

furnitureindustry

oppor un y

or

e

urn ure

market

Changingdemographicsand

HugeImporterofRawMaterials

StringentHousingMeasures

Governmentplansto

issueoldfornew

furnituresubsidy

programin2012to


prospectsfor

future

growth

CredibilityCrisis

consumptionof

furniture

products


24/26

Appendix(1/2)

Ratio Calculations

Operating

Margin (Operating

Income/Revenues)*100

Ratio Calculations

CurrentRatio CurrentAssets/Current

Liabilities

NetMargin (NetProfit/Revenues)*100

Profit

Before

Tax

Margin (Income

Before

Tax

/Revenues

*100

CashRatio

{(Cash&BankBalance+

MarketableSecurities)/Current

Liabilities)}

DebttoE uit TotalLiabilities/Shareholders

ReturnonEquity(ROE)et ncome are o ers

Equity)*100

Return

on

Capital

(ROCE)

EBIT/(TotalAssets Current

Liabilities)*100

qu y

DebttoCapitalRatio {TotalDebt/(Shareholders

Equity+TotalDebt)}

InterestCoverageRatio EBIT/InterestExpense

Return

on

Working

Capital et ncome or ng ap ta

*100

Return

on

Assets (NetIncome/TotalAssets)*100

Return

on

Fixed

Assets (NetIncome/FixedAssets)*100

FixedAssetTurnover Sales/FixedAssets

AssetTurnover Sales/TotalAssets

OperatingCosts(%ofSales) (OperatingExpenses/Sales)

*100

Administration

Costs

(%

of

Sales)(AdministrativeExpenses/Sales)*100

CurrentAssetTurnover Sales/CurrentAssets

WorkingCapitalTurnover Sales/WorkingCapital


Interest

Costs

(%

of

Sales) (Interest

Expenses

/

Sales)

*100

CapitalEmployedTurnover Sales/ShareholdersEquity


25/26

Appendix(2/2)

Keysources

of

information

used

in

the

report

include

the

following:

Newsarticles

Business

intelligence

databases n us ryassoc a ons

Governmentpublications



26/26

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Furniture Market in China 2012 - Competition, Key Takeaways

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