The company released its 2023 annual report and 2024 quarterly report: in 2023, the company achieved revenue of 6.074 billion yuan, an increase of 11.34% over the previous year; net profit to mother was 413 million yuan, an increase of 65.08% over the previous year. Among them, the 2023Q4 company achieved operating income of 1,938 billion yuan, an increase of 44.98% year on year; net profit to mother was 126 million yuan, an increase of 60.59% year on year. With 2024Q1, the company achieved operating income of 1,842 billion yuan, an increase of 45.30% over the previous year; net profit to mother was 101 million yuan, an increase of 15.06% over the previous year.

The production capacity problem had a short-term impact and was resolved in the second half of 2023. We are optimistic about the continued restoration of the company's related business growth rate. By product, the company's furniture series revenue in 2023 was 2.71 billion yuan, up 4.79% year on year. Mainly due to factors such as the transfer of iron, wood and board products in the first half of 2023 and market demand exceeding expectations, resulting in production capacity not fully meeting demand. As the production capacity problem was solved in the second half of the year, related needs were gradually met; in 2023, revenue of the home series was 2.285 billion yuan, up 22.31% year on year; the pet series achieved rapid growth, with new products showing excellent performance, achieving revenue of 519 million yuan in 2023, year-on-year The increase was 37.30%; in 2023, the garden series revenue was 466 million yuan, down 12.26% year-on-year. We believe that the company has a strong product matrix and new product layout capabilities, which is expected to continue to boost the growth of the company's performance. In 2023, the company's first batch of serialized products, eKHocCollection, was launched. The product category covers restaurants, bedrooms, dining rooms, kitchens, etc. This type of serialized products uses unified CMF element design and visual communication to provide consumers with a scenario-based and stylized shopping experience at home. In terms of product design, 190 new global patent authorizations were added in 2023, including 166 design patents and 24 utility models; in 2023, 9 international authoritative design awards were added, including the German iF Design Award and the Italian A'designAward, to continuously enhance the company's product design capabilities.

In terms of channels, the company continued to strengthen its channel layout. In 2023, the B2C business revenue of the Amazon platform increased by 12.82% year on year, accounting for 68.55%. In addition, the company continued to expand online retail platforms such as SHEIN, TikTok Shop, Mercado Libre (Meike Duo), and Fressnapf; in terms of B2B business, mainly affected by capacity issues and delayed arrival of new products, the company's main online B2B channel revenue fell 10.98% year on year in 2023, but through Europe and the US With the expansion of offline business, the company's offline B2B business revenue increased by 21.64% year-on-year.

Profit forecast and rating: We expect the company's net profit to be 4.93, 5.74, and 670 million yuan, respectively, up 19.4%, 16.6%, and 16.6% year-on-year. The current closing price corresponds to PE 19 and 16 times in 24-25. As a leading home and furniture cross-border e-commerce enterprise, refer to comparable companies giving the company a 23 to 24 times PE valuation in 2024, corresponding to a reasonable value range of 28.23 to 29.46 yuan, corresponding to the 1.52 to 1.59 times PS valuation in 2024.” “Better than the market” rating.

Risk warning: International trade frictions have intensified, shipping prices have fallen short of expectations, and market demand fluctuates.