China’s major furniture product manufacturer Huisen Household International Group Ltd. (Huisen Household or the Group; HKG:2127) announced unaudited interim results for the period ended 30 June 2021 (the Reporting Period) today.
During the Reporting Period, the Group’s revenue recorded a year-on-year increase of approximately 47.3% to approximately RMB2.4 billion. Gross profit was approximately RMB630 million, representing an increase of 72.1% as compared with the same period last year. The profit during the period was approximately RMB421 million, representing an increase of 75.9% as compared to the corresponding period of 2020. Earnings per share were RMB0.14. This was mainly due to the fact that the coronavirus disease 2019 (COVID-19) pandemic in Mainland China basically came under control during the Reporting Period, and various industries, including the furniture manufacturing industry, were fully recovered.
Mr. Zengming, chairman and executive director, said: “The first half of 2021 was a period of accelerated reform for the furniture industry. Despite the unstable development of the COVID-19 pandemic overseas, the pandemic came under control gradually after the launch of the vaccination programs around the globe, especially in China and other European and American regions. Encouraged by the recovery of the economy in various industries and the improvement of the consumer sentiment, many countries and regions recorded satisfactory economic growth in the first half of 2021, boosting the demand for products from Mainland China.”
According to the statistics from the General Administration of Customs of the PRC, in the first half of 2021, the total trading import and export value of goods in China amounted to approximately RMB18.1 trillion, representing a year-on-year increase of approximately 27.1%, while the export value of furniture and parts amounted to approximately RMB226.4 billion in the first half of the year, representing a year-on-year increase of approximately 44.5%. The overall profits for furniture enterprises in China had increased during the first half of 2021.
The Group’s panel-type furniture products include television cabinets, bookshelves, shelves, desks and coffee tables. Panel-type furniture has always been the core revenue driver of the Group. During the Reporting Period, vigorous demand was sustained in overseas markets. Leveraging on our expertise and experience in product design and development as well as our business relationship with major overseas retail chains and furniture traders, our revenue from panel-type furniture increased from RMB1.5 billion to RMB2.3 billion for the Reporting Period, representing an increase of approximately 50.5%.
The Group’s upholstered furniture mainly includes sofas. During the Reporting Period, the demand for upholstered furniture has increased. The revenue from upholstered furniture recorded an increase of approximately 27.3% to RMB74.8 million. During the Reporting Period, some of the upholstered furniture had a relatively higher gross profit margin, resulting in an overall increase in the gross profit margin of the sales of upholstered furniture.
Others include sports and recreational equipment. Sports and recreational equipment mainly include table tennis tables and pool tables. During the Reporting Period, the revenue from others amounted to RMB69.9 million, representing a decrease of 3.1% from the corresponding period of 2020, mainly due to the suspension of the production of outdoor furniture. The gross profit margin of others increased from approximately 28.2% from the corresponding period of 2020 to 30.1% in the Reporting Period, mainly due to the increase in the average product selling prices of sports and recreational equipment.
In order to meet future market demand and increase production capacity, Huisen Smart Home Technology (Longnan) Co., Limited*, a subsidiary of the Company as the buyer, has entered into a contract for the grant of the land use rights of state-owned construction land* with Natural Resources Bureau of Longnan* as the seller, for the acquisition of the state-owned land-use rights for a parcel of land with a total site area of approximately 233,736 square meters located in Trading Logistics Park, Longnan, Ganzhou, Jiangxi Province, the PRC for consideration of RMB20,802,600. The land parcel is designated for the construction of new manufacturing factories specialized in the production of panel-type furniture and upholstered furniture.
Besides, the Company has entered into a strategic cooperation agreement with Jiangxi University of Science and Technology to further enhance the cooperation in relation to the R&D on smart furniture on 16 June 2021.
Looking to the second half of 2021, it is expected that furniture exports in the PRC will continue to boom with the normalization of pandemic prevention and control as well as the enhanced demand for home life driven by the policy of staying home during the pandemic. Furthermore, under the backdrop of accelerated vaccinations around the globe, the economy in Europe and America has been recovering gradually, which will generate robust overseas demand to support the exports of the PRC. Nevertheless, facing the possible tightening of the quantitative easing policy by the US Federal Reserve and the potential risk in respect of the possible cooling down of the property market, we will stay highly alert, constantly expand into markets outside the United States and continue to strengthen our ODM capability, so as to stay calm and composed during market fluctuations.