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Judging from the recently announced performance report of Man Wah Holdings for the 2021 fiscal year, there has been suspense in the battle for the leader in the furniture industry.

According to public information, Oupai Home Furnishing will achieve operating income of 14.74 billion yuan in 2020. Man Wah Holdings will achieve operating income of 13.699 billion yuan for the fiscal year ending March 2021. The gap between the second place and the first place is only about 700 million yuan, and this gap was as much as 2.4 billion yuan in the previous year.

The growth rate of Man Wah Holdings' operating income in 2020 is 35%, while the growth rate of Opal Home Furnishing's operating income is 8.91%.

Considering that Man Wah Holdings has a high growth rate in fiscal 2021, it may be because it did not cover the data of the first quarter that was severely affected by the epidemic last year, so it may be more objective to examine the growth rate in the last two years.

In 2019, Man Wah Holdings' operating income growth rate was about 8%, and in 2020, the revenue growth rate was about 35%.

The revenue growth rate of Opai Home Furnishing in 2019 is about 18%, and the revenue growth rate in 2020 is about 9%.

In the past two years, the revenue growth rate of Man Wah Holdings is still higher than that of Oupai Home Furnishing.

1

Man Wah Holdings' domestic business is growing rapidly

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In the 2021 fiscal year, Man Wah Holdings' domestic market's main business revenue increased by 61.9% to 9.98 billion Hong Kong dollars, accounting for more than 60% of the group's revenue, becoming the main growth driver.

As of March 31, 2021, the Group has a total of 4,122 Chivas first-class and Chivas five-star mattress brand specialty stores in China, and the number of specialty stores has increased by 1,125 within one year.

Man Wah Holdings is an enterprise that pays equal attention to domestic and foreign sales. Last year, the ratio of domestic and foreign sales was six to four.

Compared with the rapid development of the domestic market, the growth rate of the international market last year was not as fast as that of the domestic market.

After the second quarter of 2020, the Group's North American export orders resumed rapid growth, driving the North American market's main sales revenue to increase by approximately 30.5% to 4.58 billion Hong Kong dollars. The Group's new factory in Vietnam officially started production in 2020, and its production capacity has increased rapidly. Most of the orders from US customers have been basically transferred to the Vietnam factory for production, effectively reducing the impact of tariffs imposed by the US government.

The Group's main sales revenue in Europe and other overseas regions (excluding the Home Group) fell by 6.5% year-on-year to HK$877 million.

The Home Group owns five sofa manufacturing plants in Poland, the Baltic States and Ukraine, which are mainly engaged in the design and production of fixed sofas and sofa beds. The products are sold to many European furniture retailers, and revenue increased by 2.7% compared to the same period last year.

2

Oupai Home Furnishing slows down

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Judging from the 2020 annual report, the overall growth of Opai Home Furnishing's operating income is 9%, which is much lower than the 35% growth rate of Man Wah Holdings' domestic business.

In terms of products, the operating income of its main products, kitchen cabinets and wardrobes, decreased by 2.13% year-on-year and increased by 11.71%. The performance decline of the kitchen cabinet business on which Opel started, is worthy of attention.

Sanitary wares and wooden doors with smaller operating income increased by 18.48% and 29.04% respectively. Other businesses increased by 48.4%.

From the perspective of sales channels, revenue from directly-operated stores increased by 14.68%, dealership stores increased by 5.95%, bulk business increased by 24.05%, and other channels decreased by 19.29%.

Regardless of whether it is by product or by sales channel, the sales of traditional products and channels have grown slowly, and some even have negative growth. New products and new sales channels have grown considerably.

Oupai Home Furnishing has a new phenomenon of long-term business development.

The speeding up of Man Wah Holdings and the slowing down of Oupai Home Furnishing will bring suspense to the battle for the top name in furniture manufacturing.

The praying mantis catches the cicada, and the oriole is behind. In fact, the gap between the third place and the top two is not very far.

3

The third place is likely to catch up

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In 2019, the operating income gap between Man Wah Holdings and Gujia Home Furnishing was extremely small, which was 11.125 billion yuan and 11.09 billion yuan, respectively, and the gap was only 30 million yuan.

In 2020, the operating income gap between Man Wah Holdings and Gujia Home Furnishings has widened, reaching 13.699 billion yuan and 12.666 billion yuan respectively, and the gap widened to 1 billion yuan.

Considering that the annual report of Man Wah Holdings did not include the data for the first quarter of last year, while Gujia Home Furnishing included the first quarter of last year, the actual gap between the two was not so large.

If Gujia Home Furnishing is able to make good use of it in the future, it is also possible to become a champion in furniture manufacturing.