Digital home decoration brand leader, benefit from consumption + completion of the "double repair". The company was founded in 1997 and has been leading the innovation of home decoration industry since its establishment for 26 years. Since 2020, the company has fully implemented the "Science and Technology Home Decoration Strategy". At present, it has opened up the full-link digitalization of home decoration business. it is one of the few home decoration enterprises in the industry with this ability. As a head home decoration brand, the C-end premium capacity is strong, the gross profit margin is much better than that of the industry, the cash flow continues to be excellent, and the profit quality is high. Looking forward to 2023, it is expected that with the "double repair" of residents' consumption and completion chain, the demand for new housing decoration, second-hand housing and old housing renovation is expected to stabilize and pick up, superimposed in recent years, the epidemic and the real estate downturn have a greater impact on small and medium-sized equipment enterprises, the industry has accelerated clearance, the competition pattern has been optimized, the company as a leading operation is expected to recover significantly, and the market share is expected to accelerate.

Home improvement trillions of Red Sea market, digitalization is the key to break the situation. The scale of the home improvement market is nearly 3 trillion yuan, and the space is broad, but the competition pattern is extremely scattered, and the head market share is only about 0.1%. The core reason lies in: home decoration business chain is long and complex, and user demand is highly non-standard, which makes it difficult for enterprises to expand high-quality construction supply capacity quickly and homogenously, and there is a bottleneck in scale improvement. As an important tool to improve business standardization and realize the integration of management and control, digital technology can effectively improve the efficiency of project management and expand the management radius, which is expected to become the key for home decoration enterprises to break the situation.

"Ten years to sharpen a sword": continue to deepen digital applications, to achieve full-link digital access. The company's digital technology has precipitated for nearly 10 years, and the business running-in period has exceeded 3 years. Digitalization has covered the whole process of front-end marketing, middle-end management and back-end delivery of home decoration: 1) conversion of customer capital: the "DIM+" platform realizes modular and efficient design through built-in case template and SKU library, and quickly renders the whole house with "Zhenjia" 3D system, so as to realize users' WYSIWYG (what you see is what you get) and improve the conversion rate of customer resources. 2) material supply: the main materials implement total collection and mining to reduce costs; supporting home research and production, wood factories are equipped with intelligent production system; transportation links rely on the "Yi Ritong" SaaS platform to match the project materials distribution according to the construction schedule. 3) Construction management: set up a strict construction standard system, have its own foreman and core skilled workers, and clearly define the boundary of responsibility. The client-side "360 Sky Eye system" real-time collects and records the construction key acceptance nodes to improve the delivery quality. 4) delivery and operation: rely on "Xingyao" SaaS platform to get through the data of various digital platforms, reduce internal communication costs, and realize digital management of the whole business process.

"the right time of transformation": the leader of digital home decoration set sail, leading the ecological reconstruction of the industry. Relying on the full-link digital closed loop, the company is expected to: 1) quickly open the management radius, expand high-quality construction supply, break through large-scale bottlenecks; 2) improve profitability by reducing costs and increasing efficiency, so as to achieve a "simultaneous increase in quantity and quality" of home decoration business. 3) rely on the upgrading of digital brands, improve customer satisfaction, create a positive cycle from "marketing-customer precipitation" to the promotion of brand influence, achieve a trillion-yuan Red Sea to take the lead in breaking the situation, and the medium-and long-term market share is expected to accelerate. Push the overall operation into a new stage of high-quality development.

Investment suggestion: we predict that the company's homing net profit from 2022 to 2024 will be-7.3 shock 1.5 / 220 million RMB respectively, a year-on-year increase of-1042%, 121% and 46%, corresponding to an EPS of-1.74, 0.36 and 0.52 yuan, respectively. The current share price is-4-19-13 times the corresponding PE. For the first time, coverage gives a "buy" rating.

Risk tips: several equipment promotion is not as expected, the risk of a sharp decline in real estate sales and so on.