The author is an analyst with NH Investment & Securities. She can be reached at [email protected] – Ed.

Zinus delivered strong results in 1Q21, exceeding expectations in resolving logistics disruptions in the United States and growing the global online furniture market. Going forward, the relatively low anti-dumping tariff rate facing the company in Indonesia is expected to boost its price competitiveness, resulting in differentiated results.

Mattress sales increase

We maintain a purchase rating and TP of 115,000 W on Zinus.

As of 1H21, ocean freight rates remain high and raw material costs (eg MDI and TDI) still appear to be burdensome. In addition, we advise you to monitor the upfront costs associated with Zinus’ operation of a US plant from 2Q21.

However, from 2H21 onwards, ocean freight rates are expected to stabilize and raw material costs are expected to enter a modest downward trend on plant restarts. Importantly, it is noted that the anti-dumping tariff rate for Zinus mattresses in Indonesia, where the company’s factory is located, is very low at 2.22% – a figure that should stand out from the average. 158% encountered by operators in other countries. . In addition, the company’s mattress sales are expected to stabilize in the United States next year, which should strengthen share price momentum.

1Q21 Review: Performing at normal levels

Zinus announced 1Q21 consolidated sales of 274.3 billion W (+ 49% year-on-year) and a PO of 25.1 billion W (+ 8% year-on-year), with sales and a PO exceeding market forecasts.

In 1Q21, sales growth reached 44% yy in the United States and 123% yy in other regions, helped by: 1) the reflection of deferred sales on the resolution of logistical disruptions at the end of 2020; 2) the growing global demand for furniture online; and 3) explosive sales growth in Australia and Korea. By item, the sales growth (yy) is 59% for mattresses, 33% for bedroom furniture and 40% for other furniture. In particular, the rise in mattress sales has been remarkable, as Indonesia, where the company’s production plant is located, enjoys a low anti-dumping duty rate of just 2.22% (compared to a average of 158% for the 7 countries facing complaints). In 1Q21, GPM fell 1.8% per year, affected by high ocean freight rates and rising raw material costs (e.g. MDI and TDI), and OPM slipped 3.5 % p yy due to the decrease in GPM and the reflection in selling, administrative and other overhead costs of the labor costs of the US plant which is expected to operate from 2Q21