Incident: The company released its 2024 quarterly report. 2024Q1 achieved revenue of 3.621 billion yuan, a year-on-year increase of 1.43%, and net profit to mother of 218 million yuan, an increase of 43.00% over the previous year.
Direct revenue increased year-on-year, and overall revenue grew steadily. By channel, the 2024Q1 direct-run store/dealership business achieved revenue of 149/26.20/695 million yuan respectively, compared to +66.95%/-4.95%/+18.78%, respectively. The company's retail household strategy continued to refine, driving a high increase in revenue from the Q1 direct management channel, and the bulk business achieved double-digit growth driven by early completion. By category, 2024Q1 cabinets/closets and accessories/bathroom/wooden doors achieved revenue of 10.68/19.06/2.03/217 billion yuan respectively, or -1.62%/-3.55%/+10.22%/+4.96%, respectively. Among them, bathroom Q1 achieved double-digit growth. In terms of stores, the total number of stores at the end of the first quarter of 2024 was 8,568, a decrease of 148 from the end of 2023, including 5848/1027/991/489 Opani/Opinix stores, respectively, and -165/-51/-10/+24 compared to the end of 2023.
Gross margin continues to improve, and the results of the reforms are expected to continue to show. 2024Q1 has a gross profit margin of 29.98% (+3.30pct). The company continues to build a diversified, efficient and complete resilient supply chain management system. Supply chain management efficiency has improved markedly, and the company's large-scale procurement advantages have been further highlighted. On the cost side, the cost rate during 2024Q1 was 24.45% (+2.85pct), with sales, management, and R&D rates of +1.84/-0.48/+0.98pct to 11.59%/8.20%/6.21%, respectively. Net profit attributable to 2024Q1 increased by 43.0% to RMB 218 million, and the net margin was +1.88pct to 6.03% year over year. The company accelerates the strategic layout of large households, strengthens household business capabilities in all aspects, continues to practice internal management skills, clarify management guidelines, and improve management efficiency. It is expected that positive results will continue to be shown after organizational structure optimization and reform.
Investment advice: We expect the company's net profit to be 33.5/37.7/4.25 billion yuan in 2024-2026, respectively, and the corresponding PE is 10/9/8 times, respectively, to maintain a “buy” rating.
Risk warning: risk of falling real estate sales, risk of rising raw material prices, risk of household expansion slowing