讀後心得

Shang Yi-KY (8482) has production bases in China and Cambodia. Regarding the recent increase in import tariffs on Cambodian goods by the U.S., the company stated that its long-term orders with U.S. clients have not been affected, and production and payment processes remain normal. Due to the limited impact of its high-priced, high-margin customized furniture, Shang Yi plans to utilize its Chinese base to serve non-U.S. clients, while focusing on U.S. clients from Cambodia. The company uses these long-term orders for bargaining power, maintaining a gross margin of 34%-40%. Furthermore, the Cambodian government's reduction of U.S. import tariffs is expected to benefit Shang Yi's raw material costs. Shang Yi is also actively expanding its non-U.S. client base, having secured orders from Australia, Russia, Dubai, and Spain, and plans to acquire a Cambodian outdoor furniture company to expand its production scale.

Shang Yi-KY has two major production bases in China and Cambodia. In response to the announcement by U.S. President Trump to increase import tariffs on Cambodia to 49%, the company stated that U.S. clients have signed long-term orders with them, and production, shipping, and collections are still functioning normally without impact. Furthermore, it assessed that the high-priced, high-margin customized furniture it produces would be relatively unaffected. Shang Yi-KY mentioned that the company plans to use its China base to serve non-U.S. clients while the Cambodian base will provide production services specifically for U.S. clients. The company's business model is based on a customized order production approach, with high-end brand clients having received over 50% deposits from consumers, ensuring timely delivery within the agreed period. Thus, the company uses long-term orders as leverage for raw material pricing negotiations, which stabilizes its average gross profit margin at 34%-40%.

The major furniture-producing countries globally include Vietnam, China, Canada, Mexico, Italy, and Cambodia, with Vietnam, China, and Cambodia being significant hubs that achieve high market share due to their lower labor costs. As part of the reciprocal tariffs implemented by President Trump on April 2, these countries are subject to high tariffs of 25%-49%, which undoubtedly delivers a heavy blow to businesses that provide mass-market, low-margin furniture products. However, the high-priced, high-margin customized furniture offered by Shang Yi-KY is relatively less affected.

The Prime Minister of Cambodia has written to Trump, deciding to "immediately" lower the import tariffs on 19 types of U.S. products from a maximum of 35% to 5%. It is expected that Cambodian officials will soon have a conference call with U.S. trade representatives. Shang Yi-KY noted that the company has agreed with U.S. clients to extend current orders to 12 months to gain greater leverage in raw material pricing. Additionally, the Cambodian government has announced a reduction in certain import tariffs, which is expected to benefit Shang Yi in importing raw materials from the U.S., achieving a cost reduction multiplier effect.

Shang Yi-KY will also accelerate the expansion of non-U.S. clients to achieve the dual effect of risk diversification and overall revenue profitability. Currently, non-U.S. clients have successfully attracted interest from Australia's Casa Blanco, Russia's Dantone, Dubai's Dantone, and Spain's El Corte Ingles, receiving orders from these regions. Notably, Spain's El Corte Ingles is particularly significant, as it has 86 retail stores and is projected to generate revenues of 14.4 billion euros in 2024, making it the largest retail department store in Europe. Shang Yi-KY believes that, with the support of both U.S. and non-U.S. clients, combined with the flexible deployment of its two major production bases in China and Cambodia, along with an imminent acquisition of a Cambodian outdoor furniture company, it will integrate outdoor furniture products into its lineup, expand production scale, and contribute to revenue post-acquisition.