Home furnishing giant sells 7.8 billion! There are hidden concerns behind...

In the highly competitive home furnishing industry, many companies have successfully broken through with their unique development strategies and strong operational capabilities, and Henglin Co., Ltd. is one of them.

Henglin shares' revenue soared, but profits were under pressure!

Not long ago, Henglin Co., Ltd. released its third-quarter 2024 performance report.

According to the latest financial report data released by Henglin Co., Ltd., Henglin Co., Ltd.'s total revenue in the third quarter of 2024 was 7.811 billion yuan, an increase of 35.24% compared with the same period last year. It can be seen that the company achieved significant revenue growth in the first nine months of 2024.

Henglin's revenue growth is due to the company's diversified market expansion strategy and strong product sales capabilities. The company has successfully attracted more customers and increased its market share by increasing marketing efforts, expanding new sales channels and improving product quality.

However, behind the revenue growth, the company is facing the dilemma of declining net profit attributable to shareholders.

Henglin Co., Ltd.'s net profit attributable to shareholders of the parent company in the third quarter of 2024 was 266 million yuan, a year-on-year decrease of 27.32%; the net profit after deducting non-recurring gains and losses was 264 million yuan, a year-on-year decrease of 21.9%.

There are several main reasons for the decline in net profit: First, the exchange loss caused by the appreciation of the RMB increased year-on-year, which affected the company's income in overseas markets to a certain extent; second, the increase in shipping costs increased the company's operating costs; third, the company invested a lot of funds and resources in increasing market share and expanding new channels, which failed to be fully converted into profits in the short term.

At the same time, the ever-changing market environment has also had an undeniable impact on the company's performance. The increasingly fierce industry competition has made the competition for market share more intense; the fluctuation of raw material prices has increased the uncertainty of production costs; and the ever-changing consumer demand has put forward higher requirements for product innovation and adaptability. These factors intertwined together and jointly led to the fluctuation of the company's net profit.

Although the net profit has declined, overall, Henglin’s market performance is still remarkable.

Henglin Home Furnishing Co., Ltd. was established in 1998 and listed on the A-share main board in 2017. It was not until 2019 that Henglin Co., Ltd. began to get involved in cross-border e-commerce business, mainly selling its own brand products on platforms such as Amazon, and at the same time established overseas warehousing and logistics bases and cross-border e-commerce warehouses in the east and west of the United States.

Henglin's product line covers office chairs, sofas, massage chairs, panel furniture, PVC floors, system office furniture and other categories. The company continues to expand its product categories through acquisitions and endogenous growth to meet the needs of different consumers. For example, in 2019, the company acquired the Swiss furniture brand Lista Office to expand its high-end system office series; in 2022, the company acquired Yongyu Home Furnishing to further improve its large home furnishing strategy.

These measures not only enriched the company's product line, but also enhanced the company's brand influence and market competitiveness.

In recent years, the company has actively deployed cross-border e-commerce, and its sales channels cover mainstream e-commerce platforms at home and abroad, such as Amazon, Walmart, Temu, TikTok, etc. In addition, the company also conducts multi-dimensional marketing through social media platforms such as Facebook and Instagram to increase online channel coverage and market share.

Henglin's overseas revenue continues to grow, reaching 6.641 billion yuan in 2023, and its overseas revenue ranks first among Shenwan's secondary home furnishings industry. This data not only proves the company's strong strength in the international market, but also provides broad space and opportunities for the company's future development.

How does Henglin Co., Ltd. maintain its competitive advantage in the international market?

Henglin Co., Ltd. is able to maintain rapid growth amid fierce market competition thanks to its many advantages.

First of all, the company focuses on technological innovation, continuously invests in R&D resources, and improves the technical content and added value of its products. According to statistics, the proportion of the company's R&D investment in total revenue has increased year by year in the past three years, which fully demonstrates the company 's emphasis on and investment in technological innovation. Through independent research and development and technological accumulation, the company has a series of core technologies for product design and production processes, including independently developed 360-degree mechanical motion chassis, sensitive self-loading chassis, pressure-distributed seat cushions and backrests, multi-functional 5D armrests, etc. The use of these core technologies not only improves the quality and performance of the products, but also enhances the company's market competitiveness.

In addition, Henglin shares deeply integrates the concept of intelligent health technology into product creation, especially in the production of smart furniture products, and fully penetrates digital technology into every link. Through this deep integration, not only the functionality of the product is greatly improved, satisfying the pursuit of modern consumers for convenient and intelligent life, but also bringing users an unprecedented high-quality use experience.

In terms of panel furniture business, Henglin fully respects the personalized needs of consumers and provides customized services. Whether it is a unique space layout requirement or a specific style preference, it can be met, so that every consumer can have a unique home product.

Throughout the production process, Henglin Co., Ltd. always adheres to high-quality standards and strictly controls the selection of raw materials. In the production of sofas, high-quality fabrics are carefully selected to ensure that they are comfortable to touch, wear-resistant and easy to care for, and matched with high-quality fillings to provide excellent sitting feeling and support. For mattresses, advanced spring and latex technology is used, combined with ergonomic principles, to create comfortable and durable sleeping products for consumers, fundamentally guaranteeing the stability and durability of the products, and providing consumers with a long-term and reliable use experience.

In terms of channel construction, Henglin Home Furnishing started from OEM and gradually established an integrated online and offline channel system, adopting the OEM/ODM and self-operated brand parallel model. By building production bases integrating R&D, production and sales in China, Vietnam, Switzerland and other places, the company can quickly respond to customer needs and deliver flexibly, providing strong support for continuous order acquisition. At the same time, the company is also actively expanding new sales channels and partners to form a diversified sales channel system. These measures have not only improved the company's market development capabilities, but also enhanced the company's brand influence and market competitiveness.

Although Henglin shares have performed well in many aspects, they still face some challenges in the complex and changing market environment. In response to the problems and challenges reflected in the current performance report, Henglin shares need to plan ahead and formulate effective response strategies to improve profitability.

Henglin shares needs to maintain keen market insight at all times, pay close attention to changes in the market environment, and flexibly adjust business strategies according to market dynamics to cope with potential risks. It wins the long-term trust of consumers with high-quality products, thereby enhancing market competitiveness.

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