24Q1 revenue +11.45% YoY, net profit to mother +11.16% YoY. Maintaining an “increase in holdings” rating, the company achieved revenue of 3.645 billion yuan (yoy +2.59%) and net profit of 292 million yuan (yoy +5.40%) in 23 years, which is basically in line with the previous performance report forecast (294 million yuan), net profit after deduction of 234 million yuan (yoy +22.15%, adjusted). 24Q1 achieved revenue of 641 million yuan (yoy +11.45%), net profit to mother of 36 million yuan (yoy +11.16%), and Q1 revenue and net profit to mother increased steadily. We maintain our profit forecast. The net profit for 24-26 is 3.38/3.86/437 million yuan, respectively, and the corresponding EPS is 2.19/2.51/2.84 yuan, respectively. Referring to the 24-year Wind, the average PE value is 11 times. Considering that the company's channel changes drive the improvement of operating capacity, while laying out overseas markets earlier and the overall channel has sufficient potential for growth, the company is given a target price of 28.47 yuan (previous value of 26.28 yuan), maintaining the “gain” rating.

The retail business achieved steady growth in '23. Looking at expanding overseas market sub-channels, retail revenue in '23 increased by 0.86% to 1,977 billion yuan, of which distribution/direct store revenue was +2.58%/-24.05% to 18.81/96 billion yuan respectively. Among them, the decline in direct revenue was mainly due to the transfer of some direct-run stores. At the same time, the company's platform office empowered distribution and led to a steady increase in revenue; in addition, the company accelerated the introduction of new categories while strictly controlling risks, and fell 0.29% to 1.276 billion yuan in 23; The company actively promoted overseas market layout, and continued to develop markets such as North America/Australia. Revenue also increased 16.92% to 274 million yuan in '23. By category, cabinet/wardrobe/ wooden door revenue in '23 was -5.55%/+8.65%/+64.97%, respectively, to 22.32/10.44/ 246 million yuan. New categories such as wardrobes and wooden doors continued to expand, and strategies for all categories continued to advance.

Gross sales margin increased 0.12 pct year on year, and net operating cash flow improved significantly year on year 23. Gross sales margin increased by 0.12 pct to 29.58%, mainly due to the company increasing cost reduction and efficiency and declining raw material costs. The cost ratio also increased by 0.56 pct to 22.81% over the 23-year period, with the sales expense ratio falling 0.11 pct to 12.03%; the management+R&D cost ratio increased by 0.55 pct to 10.87%, mainly due to the company continuing to increase R&D investment in new categories to expand new categories and enhance product competitiveness; the financial expense ratio also increased by 0.13 pct to -0.09%, mainly due to interest expenses generated by the company issuing convertible corporate bonds. In addition, net operating cash flow increased 160.82% year-on-year to $644 million in '23, mainly due to increased sales repayments and the company's further optimization of supplier procurement management.

Continuing to focus on domestic retail channel construction and developing the retail side of overseas markets according to local conditions, the company continued to promote store construction. The total number of stores in various categories increased by 180 to 3,909 in '23. The company proposed a large-scale retail strategy of 140, with stores as the center to guide dealers to lay out four major channels of online/home improvement/package/office reform, and the home improvement/assembly channel business revenue doubled in 23 years. On the overseas side, the company promoted the expansion of RTA distributors in the North American market, broke through the engineering subcontract model in the Australian market, promoted platform branches in the Southeast Asian market, and developed overseas markets according to local conditions.

Risk warning: Demand recovery falls short of expectations, real estate sales are declining, and channel expansion falls short of expectations.