Incidents:
On August 21, Gujia Home Furnishing released its 2024 semi-annual results report. With 2024H1, the company achieved operating income of 8.908 billion yuan/year on year +0.34%, net profit attributable to shareholders of listed companies was 0.896 billion yuan/year on year -2.97%, and net profit attributable to shareholders of the parent company after deduction was 0.781 billion yuan/-6.76% year over year. With 2024Q2, the company achieved operating income of 4.558 billion yuan/-7.44%, net profit attributable to shareholders of listed companies was 0.476 billion yuan/-9.07% YoY, and net profit attributable to shareholders of the parent company after deduction was 0.405 billion yuan/-18.45% YoY.
Investment highlights:
The quality of domestic trade operations is steady, and foreign trade remains booming. With 2024H1, the company achieved operating income of 8.908 billion yuan/year on year +0.34%, of which domestic trade achieved revenue of 4.722 billion yuan/year on year -9.79%, gross profit margin of 37.82% /year on year +1.27pct, foreign trade achieved revenue of 3.887 billion yuan/year on year +12.59%, gross profit margin of 26.04% /year on year +2.87pct. In terms of domestic trade, the company adheres to “two wings in one”, adheres to the strategy of raising the high and low on the product side to achieve the shaping of some high-end flagship products, and launched a “local equipment/micro-transformation and disposal” model for the stock market, forming a positive cycle. In terms of foreign trade, we focused on key countries and regions (North America, the United Kingdom, Australia and New Zealand, Western Europe, Japan) to achieve intensive cultivation of the local market. Foreign trade revenue achieved double-digit growth over the same period last year and maintained a high boom.
The integrated two-wing strategy leads, and the multi-category layout continues to advance. 2024H1, the company's sofa business achieved revenue of 4.942 billion yuan/YoY +14.24%, gross margin of 35.14% /YoY +1.40pct, bedroom products business achieved operating income of 1.534 billion yuan/YoY -19.92%, gross margin of 40.50% /YoY +5.16pct, integrated product/custom furniture business achieved revenue of 1.268/0.491 billion yuan, or -17.42%/+24.85% YoY. The company promotes innovation in software category operations and the balanced development of the entire integrated enterprise, and accelerates the growth of the main business, the large guest restaurant and large bedroom software business through channel, store format, and organizational changes. Integrated whole-house customization continues to advance, and revenue continues to grow relatively well.
Gross margin bucked the trend, leading in multiple dimensions of efficiency and cost. The 2024H1 company's comprehensive gross margin level reached 33.03%/+1.52pct year over year. The 2024H1 company's cost rate for the period was 21.27%/+2.07pct year on year, and the sales expense rate/management expense rate/R&D expense rate/financial expense ratio were 17.02%/2.39%/2.03%/-0.17%, respectively, +0.92/+0.21/+0.65/+0.29pct year on year.
After years of lean manufacturing transformation, the company's major factories at home and abroad have completed lean production line construction characterized by “agile adaptability, independent operation, and digital transparency”, pursuing multi-dimensional leadership in quality, efficiency, and cost.
Profit forecast and investment rating: The company is the leading soft home furnishing company in China. Domestic trade focuses on the three major spaces of the living room, bedroom, and restaurant. It develops customized business through an overall strategy, and continues to expand products and channels. Foreign trade continues to be booming, and growth can be expected. We expect that in 2024-2026, the company's revenue will be 19.795/21.769/23.972 billion yuan, net profit to mother 2.109/2.328/2.568 billion yuan, and the corresponding PE valuation will be 10/9/8x, maintaining a “buy” rating.
Risk warning: Competition in the industry intensifies, real estate demand falls short of expectations, raw material prices fluctuate, consumption recovery falls short of expectations, and sub-brand investment falls short of expectations.