Core views
In the first half of 2024, the company achieved revenue of 39.75 billion yuan, the same as the previous year; net profit to mother was 2.32 billion yuan; and the adjusted net profit to mother was 4.08 billion yuan. The home improvement and housing rental business has become a new growth engine, achieving high growth over the same period last year. The company's profit improved significantly in the second quarter, achieving net profit of 1.9 billion yuan in a single quarter, an increase of 46.2% over the previous year. The number of stores and operating efficiency continued to improve. The number of stores increased to about 0.046 million, and the number of active agents was 0.412 million per month. In addition, the company plans to further expand and extend the share repurchase plan. The repurchase authorization was increased from 2 billion US dollars to 3 billion US dollars, and the repurchase plan period was extended until August 31, 2025. While giving back to shareholders, it shows strong confidence in development.
occurrences
On August 12, the company announced its interim results. The first half of the year achieved revenue of 39.75 billion yuan, the same as the previous year; net profit to mother was 2.32 billion yuan, a decrease of 1.73 billion yuan compared with the same period of the previous year; and realized adjusted net profit of 4.08 billion yuan, a decrease of 1.85 billion yuan compared to the same period last year.
Brief review
Profits improved sharply in the second quarter, and the non-real estate transaction business became a new growth engine. In the first half of 2024, the company achieved revenue of 39.75 billion yuan, the same as the previous year. The home improvement and home rental business performed well. The home improvement business revenue was 6.45 billion yuan, up 59.9% year on year; GTV was 7.6 billion yuan, up 24% year on year, contributing profit margin increased 1.1 percentage points to 29.9% year on year; housing rental business revenue was 5.81 billion yuan, up 176.7% year on year, and GTV was 50.3 billion yuan, down 3.9% year on year, contributing profit margin up 1.3 percentage points to 22.8% over the previous year. Affected by the high base of the real estate market in the first half of 2023 and the downturn in the new housing exchange market in the first half of 2024, the company's stock housing and new housing business revenue declined in the first half of 2024. The revenue from the stock housing business was 13.06 billion yuan, down 16.3% year on year, GTV was 1023.8 billion yuan; new housing business revenue was 12.85 billion yuan, down 24.9% year on year, and GTV was 387.1 billion yuan. In the first half of the year, the company achieved net profit of 2.324 billion yuan, a year-on-year decrease of 42.7%, and an adjusted net profit of 4.09 billion yuan, a year-on-year decrease of 31.0%. However, there was a marked improvement in the second quarter. Net profit for the single quarter was 1.9 billion yuan, up 46.2% year on year, and adjusted net profit of 2.69 billion yuan, up 13.9% year on year.
Stores have expanded, and operational efficiency has improved. As of mid-2024, the number of the company's stores was about 0.046 million, an increase of 6.9% over the middle of last year; the number of active stores was about 0.044 million, an increase of 8.1% over the middle of last year; the number of agents was about 0.459 million, an increase of 5.2% over the middle of last year; the number of active agents was about 0.412 million, a slight increase from about 0.409 million in the same period last year. In the first half of 2024, the company established strategic cooperation with high-quality developers through innovative service product models, and used digital tools and integrated online and offline governance mechanisms to further reduce the risk of non-compliance while improving elimination efficiency.
The company plans to expand and extend the share repurchase plan, demonstrating confidence in development. In 2024, the company spent $0.48 billion on the existing share repurchase program, and the number of shares repurchased represented 2.75% of the issued share capital at the end of 2023. On August 12, 2024, the company plans to further expand and extend the share repurchase program. The repurchase authorization will be increased from 2 billion US dollars to 3 billion US dollars, and the repurchase plan period will be extended until August 31, 2025. While giving back to shareholders, it has demonstrated strong confidence in development.
Maintain profit forecasts and buy ratings. We forecast the company's EPS of 1.78/1.99/2.18 yuan for 2024-2026, and the company's non-GAAP net profit for 2024-2026 is 10.75/11.68/12.62 billion yuan, respectively. We are optimistic about the company's leading position in the field of stock housing and new housing transactions, the development potential of the second track business, and maintain the purchase rating.
Risk warning: 1) The repair of second-hand housing and new housing transactions may fall short of expectations. Subsequent new and second-hand housing market trends are still affected by the macroeconomic environment and residents' income expectations. If housing transactions fall short of expectations, it may cause the company's GTV and trading business revenue growth to fall short of expectations and put pressure on performance; 2) Emerging business development may fall short of expectations. The company joined Shengdu Home Furnishing in the second quarter of 2022, and plans to complete the acquisition of iSpace Home Furnishing in the first half of 2024. In the future, it will rely on the home improvement business to open up a second growth curve. However, there is a risk that the integration results will fall short of expectations, and iSpace Home Furnishing has a risk that the acquisition will fail; the home improvement business is not a completely standardized business, and there is also a risk that the results of replication in many places will fall short of expectations.