Performance recovered steadily in the first half of the year, continued to build core competitive barriers, and maintained a “buy” rating. I Love My Family published its 2023 annual report. In 2023H1, the company achieved revenue of 6.26 billion yuan, an increase of 3.0% over the previous year.
Net profit for the return was a loss of 50 million yuan, a sharp decrease of 340 million yuan from the same period in 2022. The company's brokerage business has improved markedly, and its advantages in multi-track operation are obvious. At the same time, by continuously cultivating its own traffic and establishing a large real estate brokerage model, the company has the motivation and opportunity to continue to increase its market share, and the overall profit level continues to recover. We maintain our profit forecast. We expect the company's net profit to be 1.3, 220 million yuan, and 330 million yuan respectively from 2023 to 2025, and EPS to be 0.06, 0.09, and 0.14 yuan respectively. The PE valuation corresponding to the current stock price is 49.7, 30.3, and 20.1 times, respectively, maintaining the “buy” rating.
Xiangyu's business has expanded in an orderly manner, and the brokerage business has improved significantly
As of 2023H1, the number of properties managed by the Xiangyu business was 2620,000, an increase of 3.1% compared to the end of 2022. Achieved revenue of 2.83 billion yuan. If we consider housing income from asset disposal income, gross margin was about 11.1%, up 3.3 pct year on year; thanks to the recovery in the stock housing market and the increase in market share in some core cities, brokerage business revenue was 2.35 billion yuan, up 34.1% year on year, gross margin was 22.5%, an increase of 2.6 pct over the previous year; while the new housing business adopted the operating principle of “scale control, quality assurance, and efficiency improvement”, achieving revenue of 640 million yuan, a year-on-year decrease of 8.4%.
Cultivate stable own traffic and accelerate the development of digital strategies
The company takes the construction of its own official website and its own app as a starting point to cultivate long-term stable own traffic and reduce customer acquisition costs. Among them, MAUs on the app side, PC side, and mini program side reached 3.39 million, 5.47 million, and 2.2 million respectively in the first half of the year, with year-on-year increases of 7%, 21%, and 8%, respectively. At the same time, the company reached a strategic cooperation with the fourth paradigm, forming a “real estate agent model” unique to I love my family, shortening the agent training cycle and improving the efficiency of enterprise operations.
Profitability has improved, and sales expenses have decreased year over year
The company's net profit to parent for the first half of 2023 was a loss of 50 million yuan, a sharp decrease of 3.4 billion yuan from the same period in 2022 (-380 million yuan for the same period in 2022). The gross margin was 10.9%, an increase of 2.7 pct over the previous year. The net interest rate was -0.8%, up 6.1 pct from the previous year. At the same time as the company's profitability improved, by reducing franchise business with low operating efficiency in some non-core cities, 2023H1 sales expenses were 370 million yuan, a year-on-year decrease of 3.9%.
Risk warning: The sales scale of the industry fell short of expectations, and the expansion of Xiangyu's business fell short of expectations.