On March 4, the China Securities Regulatory Commission issued a review and approved the first application for Guangzhou Ningji Decoration Co., Ltd. (hereinafter referred to as “Ningji Decorationâ€).
Ningji Decoration currently has a total share capital of 40 million yuan. The chairman of the company is Jiang Yan. The company's leading product is a custom closet. The company was established on July 15, 2003. From the financial indicators of the past three years, Ningji Decoration has a relatively good growth. In just seven years, its operating income has reached 600 million yuan and its net profit has reached 84 million yuan.
Under the background that the country's real estate industry has been severely regulated and the transaction volume has fallen sharply, the company's growth has great uncertainty. In the proposed prospectus, Ningji Decoration has a risk warning that other forward-looking statements may be inaccurate than other listed companies.
The environment is getting colder
In 2010, the state imposed strict regulation on the real estate market, and this regulation did not show signs of weakening in 2011. Although the custom wardrobe industry will not be affected by the macro-control of the real estate industry in the short term, due to the correlation between the furniture industry, the decoration industry and the real estate industry, if the macro-control leads to a long-term downturn in the real estate market, the custom wardrobe industry will be affected, The company's operating results have an adverse impact.
According to the latest research report released by Huatai Securities (601688, shares), a new round of regulation and control policies represented by the “restriction order†and the property tax pilot levy will be introduced, which may accelerate the bottoming process of the industry boom. On the one hand, the “restriction order†has a great pressure on investment and upgrading demand. On the other hand, the adjustment of second-hand housing business tax policy, the cancellation of interest rate concessions and the continuous interest rate increase have led to a sharp increase in the cost of purchasing houses, which also has a restraining effect on rigid demand. Real estate transaction volume will decrease significantly in the first quarter. In the furniture industry, which has a strong correlation with the real estate boom, the high-speed development of Ningji Decoration is quietly changing.
On February 25th, Guangzhou City implemented the new "National Eight Articles" of the "Sui Shi" new policy officially came into effect, and the volume of first-hand housing in Guangzhou's property market fell. According to statistics from relevant local authorities, on February 26th and 27th, there were only 314 sets of first-hand online registrations in Guangzhou. Compared with February 19th and 20th before the release of the New Deal, 223 sets were reduced, and the transaction volume fell by 42%.
Increased competition
With the rapid development of the custom furniture industry, China's custom furniture industry has entered a state of super competition. Although custom furniture can be customized according to consumers' wishes, the homogenization tendency of the custom furniture industry is becoming more and more serious, and the degree of differentiation and differentiation time of products are more and more limited. Different custom furniture factories have the same style. Style, color, etc. Previously, a new product or a new technology was developed for at least a few years in the market, but now it can only be kept for a few months, and then the "cottage version" comes one after another. The competition in the custom furniture industry is far more than the similarity of products, as well as marketing planning and promotion.
In the prospectus (the draft), Ningji Decoration put the “risk of increased market competition†in the first place. According to the incomplete statistics of China's wood-based panel magazine, there are more than 300 domestic custom wardrobe brands. Some traditional furniture industry enterprises began to transform and produce custom wardrobes. In addition, many home furnishing companies are optimistic about the prospects of custom wardrobe market, including cabinet enterprises, home improvement enterprises, flooring companies, and began to get involved in this industry. The gradual deepening of market competition will lead to the gradual progress of the industry average profit margin. decline.
Contrarian investment
In the context of major changes in the macro environment, Ningji Decoration plans to increase production significantly. The company plans to use the raised funds of 198 million yuan to invest in the "customized wardrobe technology upgrade project." According to the prospectus (declaration), after the completion of the technical upgrade, the company's cabinet production capacity will increase by 650,000 pieces, and the annual production capacity of Tuen Mun will increase by 500,000 units. The annual production capacity of the core will increase by 1.37 million units.
According to the company's disclosure, the company's capacity utilization rates in 2008, 2009, and 2010 were 89.15%, 92.63%, and 86.37%, respectively. The capacity utilization rate in 2010 has shown a downward trend. Once the company's fundraising project is implemented, there is still a large uncertainty about the new capacity that cannot be digested in time.
In addition, the company's main raw material MDF and steel and aluminum-based hardware accessories and labor prices are rising, which will have a negative impact on the company's profitability.
Operation pending
In the furniture sales contract, it is often agreed that “customized products are not refundable unless the parties agree in advanceâ€, and almost no custom furniture companies have a “package return†agreement in the contract. At the same time, in the sales contract, usually only the area of ​​the board used is listed, but the specific tailoring size is not reflected in the contract, which undoubtedly also makes it difficult to defend the rights after the dispute.
Although Ningji Decoration is the number one in the industry, it will be found that it is not uncommon to complain about the company’s “Sofia†brand from an online search.
A netizen said that he ordered the Sophia wardrobe (order number 00002265, U card number) at the group purchase site on July 25, 2009, but there were many problems in the installation. Any two of the three sliding doors are uneven; the separator edge is peeled off; the surface of the vertical plate is upturned and cracked; the bottom edge banding is rough, and the sample in the store cannot be compared. In addition, Sofia installers have a poor service attitude.
A netizen complained that he customized a Sophia wardrobe of nearly 4,000 yuan last year, but found that the size of the design was completely wrong, resulting in the wardrobe and the wall could not be matched. After 2 rectifications, it was still unqualified.
Not only has the number of complaints increased, but the company still has tax evasion. In August 2009, the Eastern District Inspection Bureau of the Guangzhou Municipal State Taxation Bureau inspected the taxation of Ningji Decoration from January 1, 2006 to December 31, 2008, and issued the Suiguo Tax Dongji Office [2009] No. 244. The tax treatment decision book verified that 15 “Uniform Invoices for Highway and Inland Freight Transport Industry†obtained by the company from 2007 to 2008 were fake invoices with a total amount of RMB 1,096,600. The company paid a corporate income tax of 140,000 yuan for this purpose.
Ningji Decoration explained in the proposed prospectus that “mainly due to the lack of identification experience of invoice personnelâ€. But this explanation is rather stubborn, and it is reasonable to say that the company can completely ask the other party to reissue the "true invoice." Another possibility for this situation is that the company deliberately purchases fake invoices to evade taxes. This reflects from the side that the company's operation has yet to be standardized.
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