Events:
The company released its mid-2023 report. In the first half of 2023, the company achieved a total operating income of 1.34 billion yuan, an increase of 38.7% over the same period last year, and a net profit of-150 million yuan.
Comments:
Home improvement revenue rebounded, the performance has been repaired. At the revenue end, in the first half of 2023, the company's home decoration business achieved revenue of 1.17 billion yuan, an increase of 41.9% over the same period last year. With the gradual recovery of land sales and the landing of the Baojiao building policy, the rapid repair of residential completion has led to a rebound in the scale of the company's home decoration business. On the profit side, in the first half of 2023, the company achieved a gross profit margin of 32.6%, an increase of 6.6pct over the same period last year; the expense rate during the period was 45.9%, a decrease of 34.2 pct over the same period last year; and the net interest rate was-11.2%, an increase of 28.7pct over the same period last year, and the net profit was 230 million yuan less than the same period last year. In terms of cash flow, in the first half of 2023, the company achieved a net cash outflow of 20 million yuan from operating activities, 100 million yuan less than the same period last year; of which, the cash-to-cash ratio was 93.7%, down 19.6pct from the same period last year, and the cash flow performance improved.
Digital home improvement business is advancing steadily. The company continues to strengthen the leading role of digital loading business, marketing, focusing on product richness and price advantage. By the end of the second quarter of 2023, the company had 33648 SKU online products, an increase of 120.12% over the same period last year. Among them, the vertical supply chain had a total of 7813 SKU products on sale, up 49.30% from the same period last year; and the regional supply chain online had 25835 SKU, an increase of 156.99% over the same period last year. In terms of delivery, the full-cycle management and control efficiency of the SaaS system was further strengthened. The just-in-time delivery rate of digital loading business was increased to 97%, and the on-time delivery rate of original business was increased by 8pct to 98%.
AIGC design tools landed, enabling home improvement marketing and design. Based on the advantages of digital system and the accumulation of long-period high-quality underlying data, the company actively promotes the application of AIGC in the decoration industry chain. In the first half of 2023, the company combined AIGC technology with Zhenjia wood design system to release "Zhenjia AIGC" design tools to enrich design space and improve design efficiency; after that, it associated "Zhenjia AIGC" with the company's supply chain and database, and embedded AIGC technology into the whole delivery process of "from model to deepening and then to accurate landing". In addition, the company has launched "AI Creative Master" and "AI Xiaobai designer" intelligent application design tools for users, which can automatically generate home decoration plans and design effects according to the keywords or picture and text information provided by users, which is expected to improve the efficiency of getting customers.
Maintain the "overweight" rating. Considering that the pace of recovery of the company is faster than expected, we raise our profit forecast for 2023. It is estimated that from 2023 to 2025, the EPS will be 0.17 yuan / 0.53 yuan / 0.77 yuan, corresponding to the PE of 50.04 pound 15.75 Universe 10.86 times.