The company released its 2024 semi-annual report: in the first half of 2024, the company achieved operating income of 8.908 billion yuan, a year-on-year increase of 0.34%; net profit to mother of 0.896 billion yuan, -2.97% year-on-year; net profit after deduction of 0.781 billion yuan to mother, -6.76% year-on-year. 2024Q2 achieved operating income of 4.558 billion yuan, -7.44% YoY; net profit to mother 0.476 billion yuan, -9.07% YoY; net profit of 0.405 billion yuan after deduction, -18.45% YoY.
The basic sofa business continues to grow rapidly, and the growth of the customized business is prominent. Looking at the business split, 2024H1's revenue from sofas, bedroom products, integrated products, custom furniture, and IT services reached 4.942 billion yuan, 1.534 billion yuan, 1.268 billion yuan, 0.491 billion yuan, and 0.325 billion yuan, respectively, +14.24%, -19.92%, -17.42%, +24.85%, and -22.51%, respectively.
The company actively seeks solutions, and with multiple initiatives, we are optimistic about the company's long-term strategic planning and long-term development. For example: 1) In terms of brand marketing, based on changes in household consumption trends, a home solution for “people and pets live together” was first proposed to further shape the professionalism and product value in the software category. In collaboration with legendary gymnastics veteran Qiusovitina, the “Gujia Waist Support Mattress” was released, which continued to dominate the Douyin platform's top mattress sales ranking in the second quarter of 2024, and pioneered the “trade-in” business model in the home furnishing industry, and received attention and coverage from CCTV CCTV1 in May 2024; 2) In terms of products, the Research Institute actively laid out core sofa frames and iron frames. Smart bed frame's R&D and layout. As of the first half of 2024, the company has basically achieved coverage of mainstream products in the industry in terms of functional iron frames, especially armrests that were put on the market in the first half of the year. At the same time, in the first half of 2024, the company laid out 21 invention patents and won two red dot design awards in 2024; 3) In terms of logistics and transportation, in the first half of 2024, the company actively promoted lean automated logistics, and completed two large-scale automated three-dimensional warehouses at the national base, and implemented ITS (Intelligent Dispatch System) and the new TMS (Transportation Management System). Digitalization of logistics has been promoted, and cost reduction and efficiency in logistics has been achieved through the formation of strategic partnerships with high-quality logistics companies across the country. In terms of own logistics, the transformation of the “self-operated+direct management” model has now been deepened, with a coverage rate of 70%.
The company's profitability is relatively stable. 2024H1's net profit margin to mother was 10.06%, -0.34pct year on year; gross profit margin was 33.03%, +1.52pct year on year. 2024H1, the company's sales expense ratio, management expense ratio, financial expense ratio, and R&D expense ratio were 17.02%, 2.39%, -0.17%, and 2.03%, respectively, +0.92pct, +0.21pct, +0.29pct, and +0.65pct, respectively.
Profit forecast and rating: We expect the company's net profit for 24-26 to be 2.103, 2.246, and 2.348 billion yuan respectively, up 4.8%, 6.8%, and 4.5% year-on-year. The current closing price corresponds to the 24-25 PE 9.76 and 9.13 times. As a leading upholstered furniture company, the company was given a 13 to 14 times PE valuation in 2024, corresponding to a reasonable value range of 33.26 to 35.82 yuan, giving it a “superior to the market” rating.
Risk warning: raw material prices fluctuate, market competition intensifies, international trade frictions.