Event: The company released its 2024 semi-annual report. Revenue for the first half of 2024 was 8.91 billion yuan, +0.3% year over year; net profit to mother was 0.9 billion yuan, -3.0% year over year. Among them, Q2 revenue was 4.56 billion yuan, -7.4% YoY; net profit to mother was 0.48 billion yuan, -9.1% YoY.
By market, domestic sales are still waiting to pick up, and export sales are growing steadily. 2024H1's domestic sales revenue was 4.72 billion yuan, -9.8% year-on-year, and industry demand recovered slowly. Facing changes in the industry, the company actively improved product cost performance, launched the “Huimin Project” series of products, and launched 698 packages to attack the market with custom furniture vendors. The whole family model continues to advance, integrating the rapid expansion of major stores, and the overall package sales account for more than 35%. The gross profit margin of domestic sales was 37.8%, up 1.3 pct from the previous year. It bucked the trend under the cost performance trend, and the effect of operational efficiency improvement measures was obvious. Aiming at the stock market, the company explores the “local installation/micro transformation and disposal” model, which is expected to become a performance growth point in the future.
2024H1's export revenue was 3.89 billion yuan, up +12.6% year over year. It is speculated that the increase in sea freight rates caused delays in orders and disrupted Q2 revenue. The expansion of supermarket customers is expected to continue to bring growth. In addition, the company is actively improving its rapid delivery capabilities to increase the share of SPO business, while actively exploring its own brands to go overseas.
The company emphasized the improvement of business quality in export sales, and 24H1 export gross margin increased by 2.9 pct to 26.0%.
By category, sofas and customizations have maintained good growth. 2024H1's sofas, bedroom products, integrated products, and customized products achieved revenue of 49.4, 1.53, 1.27, and 0.49 billion yuan respectively, compared to +14.2%, -19.9%, -17.4%, and +15.6% compared with the same period last year. Revenue from the core category of sofas has continued to grow, mainly driven by foreign trade. Among them, breakthroughs in domestic and foreign sales of functional sofas have also brought about increases. Customized products continue to be developed, and integrated sales with software have also produced good results. Bed products and integrated products are under pressure, and domestic sales are the main factors. Anti-dumping of mattresses has also had an impact on the export of mattresses. It is speculated that the export of mattresses is also under pressure, waiting for the transfer of production capacity in Mexico.
Reducing costs and increasing efficiency helped gross margin rise against the trend. 2024H1 gross margin was 33.0%, +1.5pct YoY. Domestic and foreign sales have improved, and cost reduction and efficiency are the main reasons. The 24H1 sales, management, and R&D cost rates were +0.9, +0.2, and +0.7 pct, respectively. In the context of domestic sales pressure, the cost rates all increased. Furthermore, the financial expense ratio was +0.3 pct year over year, mainly due to a decrease in exchange earnings. Taken together, 2024H1's net interest rate to mother was 10.1%, -0.3 pct year on year, and it still has stable profitability under pressure from industry demand.
Domestic demand is still waiting to improve, and export sales are expected to remain strong. Looking ahead to the second half of the year, 1) Domestic sales will still have to wait for industry demand to recover. The company is expected to gain some increase through categories such as custom furniture and functional sofas. Furthermore, the trade-in policy is expected to be implemented, and the company's performance side is expected to remain stable. 2) In terms of export sales, stable overseas demand combined with delayed orders and customer development is expected to continue to grow in the second half of the year.
Profit forecast and investment rating: Gujia has a comprehensive range of furniture categories and leading channel layout. Yingfeng Group's entry into the market is expected to give full play to the synergy effect. Looking at the long-term increase in the value of upholstered furniture brands, Gujia Home is expected to continue to expand category boundaries and increase its share with brand and product advantages. The company's net profit for 2024-2026 is estimated to be RMB 2.03, 2.19, and 2.39 billion yuan respectively. Currently, the corresponding PE price is 9.9, 9.2, and 8.5 times, respectively. We maintain the “recommended” rating.