24Q1 revenue +15.86% YoY, maintaining a “buy” rating

The company achieved revenue of 2.65 billion yuan (yoy -19.78%), net profit to mother of 217 million yuan (yoy -49.60%), lower than our previous expectations (255 million yuan), and net profit after deduction of 158 million yuan (yoy -36.32%). It was mainly affected by Hubei Qianchuan production and weak industry demand. Excluding table effects, domestic revenue was -10.52% year-on-year, and net profit to mother -7.84% YoY. 24Q1 achieved revenue of 403 million yuan (yoy +15.86%) and net profit of 0.13 billion yuan (yoy +5.35%). Considering that demand is still recovering, the revenue forecast is lowered. The net profit for 24-26 is estimated to be 2.44/2.74 billion yuan (the previous 24-25 year value was 2,97/345 million yuan), and the corresponding EPS was 0.78/0.88/0.98 yuan, respectively. Referring to the comparable company's 24-year Wind, the average PE value is 10 times. Considering the company's focus on endogenous growth, the household strategy is progressing steadily, and there is considerable room for channel and category expansion, giving the company 14 times PE in 24 years, with a target price of 10.92 yuan (before (Value $12.30), maintaining a “buy” rating.

The retail channel was under pressure in '23, and the rapid growth of new channels such as packaging and bulk excludes the influence of Qianchuan's sales. By category, the company's revenue for its own wardrobe/ finished products was -12.31%/-16.28% year-on-year to 16.73/98 billion yuan; however, benefiting from the continued promotion of household strategies and bulk business growth, cabinet/wooden door revenue also increased 2.85%/2.92% to 296/90 billion yuan in '23. By channel, direct operation/distribution revenue in '23 was -13.77%/-14.22% to 0.75/1,876 billion yuan; in terms of engineering, the company independently developed high-quality real estate enterprise customers after the release of the report in Qianchuan, Hubei, and the company's own bulk business revenue also increased 37.68% to 210 million yuan in '23; in addition, the company actively explored complete channels, and the overall revenue scale increased by more than 70% in '23, which has become an important supplementary channel.

The expense ratio for the 23-year period was +4.42pct year-on-year, and the net operating cash flow was +35.26% year-on-year, and gross sales margin fell 0.09pct to 35.06% year-on-year, mainly due to changes in business structure. The cost ratio also increased by 4.42pct to 26.48% over the 23-year period, of which the sales expense ratio increased by 2.78 pct to 12.89%. We judge that it was mainly due to the company's focus on the main retail business and increased investment in marketing expenses; the management+R&D expenses ratio also increased by 1.38 pct to 12.10%, and the financial expenses ratio also increased 0.25 pct to 1.49%. We determined that it was mainly due to the year-on-year decline in revenue and the weakening of the dilution effect on rigid costs. In addition, net operating cash flow increased 35.26% year-on-year to 463 million yuan in '23. Cash flow improved markedly, mainly due to a decrease in the company's cash for purchasing goods and receiving labor payments.

Implement the household strategy, refine the channel layout, and maintain the growth channel side of the customer order value. Since 23, the company has released the Dajia Home 4.0 store format, continuously optimized and upgraded terminal stores, while developing a sinking market to cover empty cities, and continued to gain strength in new channels such as bags and packaging, with a net increase of 79 stores to 1,896 in 23; on the category side, continue to implement the household strategy and establish a matrix of all categories of wardrobe+cabinet+wooden doors+wallpaper+finished product support. The share of large household orders has risen steadily in '23, and the retail customer order value is expected to maintain its growth trend. Revenue growth turned positive in '24.

Risk warning: Demand recovery fell short of expectations, real estate sales declined, and new channel expansion fell short of expectations.