Matters:
The company released its three-quarter report for 2023. 23Q1-3 revenue was 3.51 billion/ -6.6%, net of 4.07 million/ +113.8 percent, deduction of -20.92 million/same period last year -78.19 million; 23Q3 revenue was 1.44 billion/-0.9%, net income was 67.05 million/ -5.6%, and not 60.81 million/ +23%.
Commentary:
Choose as you like to drive a steady increase in supporting products. Single Q3 customization/supporting revenue was -5%/+41% year-on-year respectively, supporting revenue was +34% month-on-month in Q2, and self-operated packaging was around 100 million/ +39%, mainly benefiting from choosing the strategic layout at will and sorting out business channels.
Starting from a high-quality model, we will deepen the refinement of channels.
1) Choose as you like: buy 30,000 yuan for whole house cabinet products, send 20,000 yuan for whole house furniture; traffic dimension: marketing customer acquisition terminal. Help franchisees build customer acquisition channels and private traffic pools, use applet matrices to achieve high-frequency customer interaction, and turn traffic into scale opportunities; design dimensions: transform transactions. Build an “AI design factory” for designers to match products that meet the scope of customer portraits in any selected area; supply chain dimension: intelligent and experiential platform.
2) 1+N+Z investment plan: 1 is a strong franchisee with direct management, N favors service providers, generally independent stores, and Z is cooperative installation enterprises; 1 is the core of training and recruitment, and in '23, we will continue to focus on brand extension, favoring investment in specialty stores, and mainly covering third- and fourth-tier cities with gaps and long tails. Joining next year will be an important increase.
3) Keep a close eye on traffic entrances: Achieve modular personalization through self-developed simulation and decoration apps to establish a relatively standardized platform to achieve scale effects and optimize profit levels; furthermore, at present, the bag channel accounts for about 10%, and has achieved good performance.
4) Q3 launched a large standard product series for the whole house+focus on real estate bag channels+699 exclusive packages for the benefit of the public.
Fee control has achieved remarkable results. Q3 net interest rate was +2.1pcts month-on-month. 23Q1-3 gross profit margin was 34.6%, yoy +0.1pct; sales/management/R&D/finance expense ratio was -2.3/-0.2/+0.5/-0.3 pcts; consolidated period expense ratio was -2.3 pcts to 34.25%; consolidated net interest rate was +0.9 pcts yoy. 23Q3 gross profit margin 35.22%, y-1.5/month-on-month -0.9pcts; sales/management/development/finance expense ratio -3.6/-0.8/+1.1/-0.5pcts; comprehensive period expense ratio -3.7 pcts to 28.4%; consolidated net profit margin -0.2/month-on-month +2.1 pcts.
It is still in a period of reform, transformation and adjustment. It is expected that the business model you choose will continue to be iterated over the next 2-3 years, maintaining the “push” rating. The company is currently in a period of reform, transformation and adjustment. The focus is on strengthening core basic capabilities and core business growth, firmly implementing the “1+N+Z” urban development strategy, investing in integration through BIM systems, new home network MCN, and promoting live e-commerce and other business promotion. Based on this, considering Q1-3 performance, we expect net profit of 145/2.09/303 million yuan in 23-25 (original value of 2.54/328 million yuan in 23-24), corresponding PE to 25/18/12X; referring to the absolute valuation method, a target price of 22 yuan was given to maintain the “push” rating.
Risk warning: macroeconomic risks affect demand; raw material prices fluctuate; channel expansion falls short of expectations.