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In the past two days, an acquisition event has attracted market attention.

Henglin shares signed an "acquisition agreement" with Dr. Cook, Groli, and Zhai Lin to purchase 100% of the shares of Dr. Kitchen held by Groli at a cash consideration of 480 million yuan.

After the transaction is completed, Dr. Chu will become a wholly-owned subsidiary of the company.

In 2020, the two parties had signed a capital cooperation letter of intent. At that time, it was mentioned that they planned to acquire 100% of the shares of Dr. Cook held by Groli in the form of cash acquisition.

However, performance requirements were set at that time, and the average net profit from 2020 to 2022 was not less than 70 million yuan.

In the newly signed agreement this time, there is no longer a performance commitment, and there is no longer a matter of Groli's use of transaction consideration to purchase Henglin shares, and there is no matter of capital increase after the completion of the acquisition.

The acquisition together, which lasted for a year, has not yet been settled, leaving too much room for imagination in the market.

Who are the parties to the acquisition?

So, who is Doctor Cook? The export companies that deserve to be in the leading position insist on the acquisition.

This is an enterprise that manufactures kitchen cabinets, bathroom cabinets, wardrobes, wooden doors and airport equipment counters, etc. It belongs to Groli Trading Co., Ltd.

The latter’s director is Zhai Lin, who holds 100% of the shares of Groli, and is also the legal representative of Dongguan Dr. Kitchen Home Furnishing Co., Ltd., and Groli holds 100% of the shares of Dr. Kitchen.

According to the official website information, the company is headquartered in Qiaotou Town, Dongguan. It also has a Langxia branch and a Lixin branch. It has Dr. Kitchen U Home (Integral Home Furnishing), Dr. Kitchen (Cabinet), Ausburg (Bath Cabinet), Ouke (commercial counter) and other sub-brands.

In the terminal mall, you may not have seen the store of this brand, but in the engineering channel, Dr. Cook has a certain influence.

The client list includes Vanke, China Shipping, Tongchuang, Zhuoyue, Poly, Gemdale, Country Garden and other real estate companies, and it is Vanke's A-level supplier.

The business situation is very clear. We provide supporting facilities for real estate hardcover houses and do business in engineering channels, focusing on wood products.

Let's look at Henglin, an export company that started with a chair. It was founded in 1998. It first made office chairs, and later added massage chairs, sofas and other categories.

According to the 2020 financial report, in the composition of Henglin's revenue, office chairs accounted for 49.11%, sofas accounted for 19.03%, massage chairs accounted for 3.07%, Lista Office accounted for 17.18%, and panel furniture accounted for 5.02%.

In the 2019 financial report, office chairs accounted for 50.69%, sofas accounted for 24.84%, massage chairs accounted for only 1.15%, Lista Office accounted for 11.16%, and panel furniture accounted for only 0.85%.

Combined with the situation in 2018, the proportion of office chairs in various categories has gradually declined, and sofas have also declined. Lista Office will only appear in the report in 2019, and the proportion is increasing, while panel furniture has increased significantly.

In terms of performance, Henglin's strength is relatively strong.

According to the research of large materials, it can be viewed in two stages:

Before listing, from 2014 to 2016, revenue was 1.398 billion yuan, 1.53 billion yuan, and 1.723 billion yuan. Although the net profit attributable to the parent has fluctuated, it is not bad. They were 124 million yuan, 189.7 million yuan, and 263.7 million yuan in three years.

After listing, from 2017 to 2020, revenue will be 1.895 billion yuan, 2.32 billion yuan, 2.9 billion yuan, and 4.74 billion yuan; the net profit attributable to the parent company will continue to fluctuate. In the four years, they will be 166 million yuan, 170 million yuan, and 240 million yuan respectively. Yuan, 363 million yuan.

In the equivalent of 7 years, the company's revenue has risen steadily and has doubled.

The net profit attributable to the parent fluctuates. In the case of a significant increase in the volume of revenue, the net profit for some years has not risen proportionally, but the overall is still stable.

Why did Henglin Home Buy Dr. Cook?

So, when the export business is doing quite well, why does Henglin buy a wood manufacturing company and still provide accessories for hardcover?

Dacai Research has noticed that in the past few years, most of the export-oriented home furnishing companies have developed well, but due to various factors such as the trade war, the uncertainty in the future is still relatively large.

At present, leading household foreign trade companies generally have revenues of less than 5 billion. If they want to further expand the room for growth, it is still not small.

Therefore, everyone is developing a new track, making the plate more robust, and strategic choices are concentrated in three directions:

The first is to continue to deepen the business in advantageous markets and continue to tap the potential, but there is not much room for growth, as can be seen from the growth of the core market in the financial report.

The second is to move to the domestic market, and there are three more options: dealer retail, e-commerce, and engineering channels. The reality is cruel. In Henglin's focus, there are big coffee-level roles in China. It is hard to imagine how difficult it is to divide a piece of cake from the retail market.

The third is to develop new overseas markets and expand the scope of deployment, such as focusing on the Belt and Road Initiative. However, it is not a short-term success to be effective, and it needs to be promoted gradually.

The fourth is to enrich the categories. Through the output of more related products, to meet the needs of existing and new channels, it can also consolidate the fundamentals of competition and build a protective wall for future competition.

Henglin also adopted the above strategies. For example, in 2019, it acquired Lista Office, an office environment solution provider and office furniture manufacturer, for 438 million yuan, breaking through the limitations of the original single office chair.

The value of this move is threefold:

1) With the help of overseas brands, it can help expand the surrounding market;

2) Solution service providers have enhanced bargaining power.

3) According to a public statement at the time, Henglin introduced Lista Office's furniture manufacturing technology, products, and overall office environment solutions to the country, realizing a new spatial layout of smart offices and opening up the domestic office furniture market. However, this has yet to be worked hard.

There is also the creation of massage chair brands, such as the Nouhaus smart massage chair in 2020, with a revenue of over 226 million yuan. Another brand Lo has revenue of over 807 million yuan.

This acquisition of Dr. Kitchen, if it goes well, can help Henglin open up the situation in the fine decoration accessory market.

This means that after moving to the domestic market, he succeeded in making a big move.

Why is heavy chess? According to public information, Dr. Kitchen will have a revenue of 728 million yuan in 2020 and a net profit of 45.382 million yuan. After the merger, Henglin may move towards a volume of 5 billion, and it can also guarantee a certain net profit.

According to the observation of Dacai Research, Henglin has tried to run the domestic retail market in small steps, but the results are not obvious. In addition, the competition is too fierce, even with a lot of investment, the outcome is difficult to predict.

This time I change the track, go directly to the hardcover room, and acquire a mature company. Maybe the situation will be better.

Dacai Research believes that in the future, export companies will move to the domestic market and open up the situation as soon as possible to obtain obvious results. Perhaps acquiring companies that face the B-end market is the preferred strategy.

All depends on the competitiveness of Dr. Cook and how long the advantage in the field of hardcover accessories can be maintained.