The company released its 2023 annual report and 2024 quarterly report
24Q1 revenue of 780 million yuan, a decrease of 4.0%; net profit due to mother - $90 million, up 9.2%; net profit after deducting non-return to mother - $90 million, up 9.2%%; 23Q4 revenue of 1.39 billion yuan, a decrease of 10.7%; net profit to mother of 60 million yuan, same decrease of 20.1%; net profit from non-return to mother of 60 million yuan, same decrease of 1.3%.
In '23, the company's revenue was 4.90 billion yuan, down 7.8%; net profit attributable to mother was 60 million yuan, up 40.1%; net profit after deducting non-return to mother was 40 million yuan, an increase of 325.4%.
In '23, it is proposed to distribute a discovery dividend of 200 million yuan (tax included), with a dividend rate of 305%.
By product, the company's custom furniture products were 3.51 billion in 2023, down 8.6%, gross profit margin was 36.7%, and the same increase was 1.7 pct; supporting home revenue was 710 million, up 8.2%, gross profit margin 19.4%, and 3.4pct; built the industry's first AI design factory to start a major productivity transformation in the home furnishing industry. With years of in-depth AI technology layout, the company built the industry's first AI design factory based on technology research and development capabilities and extensive databases. An AI design factory is a cloud-based virtual design factory driven by AI artificial intelligence. It has changed from a traditional single store undertaking all design services to store requirements. It is an innovative model where the factory centrally designs and delivers products, and the store takes the delivered products for sale.
AI design factories can help stores and designers solve all category compatible design and sales problems, reduce the requirements for store design capabilities, and facilitate the expansion and development of stores. This will once again change the business model of the home furnishing industry and start a major productivity transformation in the home furnishing industry.
Continuously optimize the channel layout and launch the “500 Stores in 9 Cities” plan. For self-operated cities, the company adheres to the 1+N+Z city development model, converts direct stores into franchises and optimizes in an orderly manner, retains a small number of large direct stores to display and share for the entire city, and at the same time develops more self-operated franchisees, and helps franchisees expand their business in various channels in terms of logistics and delivery.
Regarding franchise channels, the company continues to increase investment promotion and store opening efforts, especially the development of empty cities, focusing on attracting large merchants and general distributors, and increasing support and preference for large merchants and general dealers.
As of the end of the 2023 period, the number of stores directly managed by the company was 46, and the number of franchised stores in self-operated cities was 285; the number of franchised stores in the company was 2005 (including self-operated franchisees, including 463 new franchisees). In 2024, the company will continue to develop its own franchises and launch the “500 Stores in 9 Cities” Youth Entrepreneurship Dream Building Program. Franchisees share logistics, installation, and after-sales with major directly managed stores to reduce the threshold and risk for franchisees.
Self-operated equipment is deeply involved in Guangzhou, Foshan, and Shenzhen, and actively explores existing markets
Facing the stock housing market, the company continues to consolidate and strengthen its digital packaging capabilities through self-management in Guangzhou, Foshan, and Shenzhen; companies in other cities actively develop HOMKOO packaging cloud members to promote local members to explore the market with “customization+support”.
Adjust profit forecasts to maintain “gain” rating
The company continues to develop a blank city and build the industry's first AI design factory, which is expected to empower the home furnishing industry. Considering the downturn in the real estate environment in 24, the company's current store opening is expected to gradually increase in 25 years, and profits will improve. We adjusted the profit forecast. The net profit for 24-26 is 1.8/2.6/340 million, respectively (the previous value 24-25 years was 1.90/230 million yuan, respectively), and the corresponding PE is 17/12/9X, maintaining the “gain” rating.
Risk warning: Channel expansion falls short of expectations; AI design factory implementation falls short of expectations; risk of fluctuations in raw material prices; increased market competition.