Incident: On July 26, 2024, the company issued an announcement. Mr. Li Donglai, the company's director and senior manager, plans to increase his holdings of the company's A shares through centralized bidding transactions in the secondary market. The increase amount is 0.15 billion yuan to 0.22 billion yuan. The increase period is within 3 months from the day after the announcement was disclosed.
The increase in executive holdings shows confidence, and both internal and external two-wheel drive are being implemented. As of the date of disclosure of the announcement, Mr. Li Donglai held a total of 19.425 million A shares, accounting for 2.36% of the company's total share capital. This increase is based on confidence in the company's future development prospects, recognition of the company's value, and effective implementation of social responsibilities, to support the company's continued and stable development in the future. In addition, Mr. Li Donglai promised not to reduce his holdings of the company's shares during the implementation of the plan and during the statutory period. Currently, real estate sales still need to be improved. The company continues to practice internal skills, firmly transform domestic trade from offline to “whole” operations, domestic trade online to channel-driven transformation, and foreign trade to “multinationalized/localized value chain integration”, and operations are expected to continue to improve.
816 National Family Day helps renew consumption. On July 25, 2024, the two departments issued “Certain Measures to Strengthen Support for Large-scale Equipment Upgrades and Consumer Goods Trade-In”, which mentions the need to promote partial renovation of old houses, kitchen and bathroom, etc., the purchase of items and materials used to adapt to aging, and promote smart home consumption, etc. The funds mainly come from ultra-long-term special treasury bond funds of about 150 billion yuan directly arranged with local authorities. Real money promotes trade-in of consumer goods, and the need to renew upholstered furniture such as mattresses and sofas is expected to be released. The company launched the eleventh season of “816 National Family Day” on July 3, and launched the second phase of the “Benefit People” campaign nationwide, proposing new initiatives such as “90 day no reason to return or exchange”, “maximum discount of the year and full year insurance”, and “7-day lightning delivery” to help trade in home consumption, and domestic sales demand is expected to be released.
Investment advice: We expect the company's net profit to be 2.36/2.71/3.11 billion yuan in 2024-2026, respectively, and the corresponding PE will be 8/7/6 times, respectively, to maintain an “increase in holdings” rating.
Risk warning: Real estate sales decline, raw material prices rise, category expansion falls short of expectations