1H23 performance is in line with our expectations
The company announced 1H23 results: 1H23 realized income of 1.336 billion yuan, an increase of 38.67% over the same period last year, a net profit loss of 150 million yuan, a loss of 383 million yuan in the same period last year, a net profit loss of 156 million yuan in the same period last year, and a loss of 385 million yuan in the same period last year, which is in line with our expectations. We expect that with the steady progress of the company's on-hand projects and the gradual recovery of business, the performance is expected to continue to pick up. From a quarterly point of view, the company's 1Q/2Q23 achieved revenue of 554 million yuan, + 47.89%, 32.81%, and net profit of-0.9 million, respectively, compared with 139 million yuan in the same period last year.
Trend of development
1. 1H23 home decoration business has picked up obviously, and Seiko equipment business continues to be under pressure. 1) Home improvement: 1H23 realized income of 1.17 billion yuan, year-on-year + 41.94%, gross profit margin from + 7.18ppt to 29.39%; 2) Public wear: 1H23 realized income of 76 million yuan, year-on-year + 20.76%; 3) Seiko: 1H23 realized income of 25 million yuan,-13.81% compared with the same period last year. We expect that with the gradual recovery of business signing and order turnover, the company's revenue will return to steady growth.
2. The profitability continues to improve, and the result of reducing cost and increasing efficiency is better. The company's 1H23 gross profit margin is 32.6%, year-on-year + 6.64ppt. From the expense point of view, the company's 1H23 expense rate is 45.94%, year-on-year-34.17ppt, in which sales / management + R & D / financial expense rates are 26.72%, 17.64%, 1.57%, respectively, year-on-year-25.19ppt/-9.1ppt/+0.12ppt, mainly due to the gradual recovery of the company's revenue scale, continuous promotion of cost reduction and efficiency, and narrowing of advertising expenses. Under the combined influence, the net interest rate of 1H23 is-11.21%, which is + 28.53ppt compared with the same period last year.
3. The digital loading business is advancing steadily, and AIGC is deeply empowered. 1) Product R & D: based on five major styles, the company develops 40 sets of full-case design cases, at the same time, improves the display effect of the exhibition hall, helps sales staff to quickly perceive consumer demand and promote landing, and shortens the conversion cycle of design agreements. As of 1H23, the company has installed a total of 33648 SKU online products, an increase of 11772 over the end of 22, and the product richness continues to improve. 2) operating system: the company continues to upgrade its digital system, develops and launches the industry's first new generation of AIGC+ real home system design tool "Zhenjia AIGC", and deeply empowers the company to develop its business. 3) delivery: the company's Xingyao SAAS system implements full-cycle digital project delivery management and control. The overall node punctuality rate of the digital loading business is 97%, the delivery completion rate is 90%, and the supply chain operation continues to improve quality and efficiency. We believe that the company's digital installation business continues to upgrade, AIGC applications continue to empower, and we are optimistic about the company's long-term and sustained growth.
Profit forecast and valuation
Keep the earnings forecast for 2023max 2024 unchanged, and the current share price corresponding to 2023max 2024 is 27max 20x Pmax E respectively. Maintain the outperform industry rating, maintain the target price of 10 yuan, corresponding to 2023Unix 2024, respectively, 32 times the price of Pmax E, 19% upside compared to the current stock price.
Risk
The decline of the real estate boom has exceeded expectations, and the competition in the industry has intensified.