Conclusion: Considering that the company's downstream demand is still being repaired, the company's 2024-2025 EPS forecast was lowered to 0.62/0.84 yuan (originally 1.26/1.43 yuan), and the 2026 EPS forecast was added to 1.06 yuan. Referring to comparable company valuations, the target price was lowered to 17.10 yuan (originally 21.45 yuan) to maintain the “gain” rating.
The company's profit grew steadily, achieving revenue of 4.9 billion yuan/ -7.80% in 2023, achieving net profit of 65 million yuan/ +40.06%; achieving revenue of 776 million yuan/ -3.98% in 2024Q1, achieving net profit of -87 million yuan/ +9.22%
Reduce costs and increase efficiency, and stable profits. The company's 2023 gross profit margin was 34.98% /+0.36pct, and the net profit margin was 1.32% /+0.45pct. 2024Q1 gross profit margin 27.81% /-3.17pct, net profit margin -11.11% /+0.69pct. The company continues to improve its competitiveness in large-scale manufacturing. Direct material costs for custom furniture were -18.27% year-on-year in 2023, driving the gross margin of custom furniture products +1.72 pct year-on-year.
The company continues to develop its own franchise. The gross margin of the franchise model is +3.15 pct compared to the year in 2023, and it is expected to promote the implementation of the “500 Stores in 9 Cities” plan in 2024.
Promote channel sinking, and enable AI to open up space. The company focuses on its main business “customization+support” to promote the new “optional” whole-house customization model. It is expected that in 2024, it will continue to explore the third-, fourth- and fifth-tier city markets and improve the national channel layout. With the support of AI technology, 2023Q3 released the Whole-House Customization Ailife6 Smart Lifestyle Series. It is expected that in 2024, the “699 Package” will be used as a guide and empowered by AI, and the company is expected to fully tap customer needs and achieve steady growth in performance.
Risk warning: Prices of raw materials fluctuate greatly: industry price competition intensifies.