[Office Partner Information Center] On March 15, the Department of Circulation Development of the Ministry of Commerce and the China Building Materials Circulation Association jointly released the National Building Materials Home Furnishings Index. In February, the National Building Materials Household Climate Index (BHI) was 78.97, up 7.62 points from the previous month. As a downstream industry closely dependent on the real estate industry, the home industry is closely related to the trend of the real estate market. Experts said that the beautiful January-February real estate sales data is good for the home improvement industry, and the leading home furnishing company is expected to improve in the first quarter.
Benefit from hot real estate market
The data shows that the national building materials home prosperity index (BHI) in February was 78.97, up 7.62 points month on month and down 3.73 points year on year. The sales of home building materials above designated size in the country was 46.23 billion yuan in February, down 4.19% from the previous month and down 21.52% year-on-year.
Qin Zhanxue, executive vice president of China Building Materials Circulation Association, pointed out that in February 2017, sales of building materials and households above designated size fell slightly by 4.19% from the previous month, but BHI rebounded slightly from the previous quarter, mainly due to the direct impact of the real estate market. At the beginning of February, the national building materials and home furnishing market was still mostly in the state of the Spring Festival, and the sales of building materials and homes above designated size decreased slightly from the previous month. The main force driving the rebound of BHI is the “Manager Confidence Indexâ€. This leading index rose by 76.74 points month-on-month and rebounded sharply for two consecutive months, indicating that the company is optimistic about market expectations. The temperature will pick up in March, and the building materials home market will enter the traditional decoration season.
Real estate is the core driver of home consumption. Take Sofia as an example. In its order structure, the proportion of new home orders is about 80%. Among them, new houses in first-tier cities account for about 50%. According to the annual report, in 2016, Sofia achieved operating income of 4.53 billion yuan, a year-on-year increase of 41.8%, and net profit attributable to shareholders of listed companies was 664 million yuan, a year-on-year increase of 44.7%. Another home brand company Qumei Home achieved operating revenue of 3.47 billion yuan in 2016, an increase of 21.3% year-on-year. The net profit attributable to shareholders of listed companies was 330 million yuan, a year-on-year increase of 10%.
Experts said that due to the introduction of real estate control policies in many places last year, the growth of the home furnishing industry is expected to be low. However, from the actual situation, the growth rate of furniture sales in the fourth quarter of 2016 did not slow down as expected. In addition, the brand, channel and scale effects of leading companies have gradually emerged and market concentration has increased.
Under the trend of price increases, the brand home faucet has strong price control ability for the terminal, which drives the profitability improvement. According to CICC research, as the dividends from real estate destocking continue, the performance of some home leading companies in the first quarter will be better than the growth rate of 23.7% residential sales in January-February.
Multiple factors drive price increases
At the Sofia store, staff told the China Securities Journal that Sophia had raised its price by 10% since March. Ou Pai cabinet clerk said that after the Spring Festival, the wooden door has been raised by 15%. The price of the wardrobe has not been adjusted yet. It is estimated that it will follow in March and April.
Guo Fanli, a researcher from the National Development and Reform Commission, predicted that the price surge in the home furnishing industry may appear in the middle of this year, and more than 80% of enterprises will raise their prices actively or passively. The rise in raw material prices, the increase in transportation links and the increase in environmental protection inspectors are all boosters for the overall price increase in the home furnishing industry.
It is understood that the primary driving force for the price increase of this round of home furnishing industry is raw materials. Since 2016, as housing prices have risen, prices of coal, steel, and wood have been arrogant. According to industry insiders, the price of household raw materials has risen to a certain extent every year, and enterprises can reduce costs by strengthening management and reducing intermediate links. However, from October to December last year, the price of household raw materials rose by more than 10%. The sponges that needed to be used in the production of soft furniture once skyrocketed by 70%, and most home furnishing companies could not afford it.
After the Spring Festival, the artificial shortage of home furnishing markets is another major incentive for price increases. A person from a furniture factory said that as skilled masters become more and more scarce, labor costs will become higher and higher.
The increase in transportation links and the increase in environmental protection inspectors are also boosters for the overall price increase in the home furnishing industry. Qin Zhanxue pointed out that the "Technical Requirements for Environmental Labeling Products - Furniture" will be implemented on February 1st. In the future, all kinds of household products and accessories will have an environmental protection mark. Green environmental protection and consumption upgrades will intensify industry reshuffle and force enterprises to transform and upgrade.
Customized home product demand improvement
In 2017, how to fight for real estate “destocking†dividends is a major focus for home furnishing companies. The industry believes that consumption upgrades promote personalized consumption, the demand for household products no longer meets their basic use functions, should add more ideas, pay attention to design concepts, brand connotation and health and environmental factors.
According to industry insiders, customized home products that tend to be personalized and integrated will occupy more market share, and the awareness and market demand for customized home products will continue to increase. At the same time, custom furniture can be scaled up with intelligent manufacturing and flexible production technology.
In 2016, the household manufacturing industry realized revenue of 855.95 billion yuan, an increase of 8.6% year-on-year, and realized a total profit of 53.75 billion yuan, a year-on-year increase of 7.9%. In recent years, the operating income of major custom furniture companies has achieved a rapid growth of 30%-40%, significantly exceeding the overall growth rate of the furniture industry. CITIC Securities pointed out that the introduction of customization concepts in the domestic home industry is less than 20 years, but the development results are obvious to all. The custom-made homes represented by Sophia, Hao Laike, Ou Pai, Shang Pin Zhai, etc., have continued to grow and are significantly better than the home industry as a whole, and the penetration rate has also increased.
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