Q2 Performance is under pressure. The company achieved operating income of 4.729 billion yuan in H1 in '24, -4.16% year-on-year, realized net profit of 0.759 billion yuan, and realized net profit of 0.658 billion yuan, or -11.91% year-on-year; of these, Q2 achieved operating income of 2.492 billion yuan in a single quarter, -9.63% year-on-year, and realized net profit of 0.361 billion yuan, or -18.15% year-on-year, and realized net profit of 0.305 In billion yuan, -24.76% year over year, the performance fell short of our previous expectations in the performance outlook.

The share advantage of multiple categories remains the same. At the industry level, according to summary data from Aowei Cloud Network, H1 range hoods achieved retail sales volume of 8.68 million units in 24, -3.3% year over year, achieving retail sales of 14.9 billion yuan, or -0.2% year over year; gas stoves achieved retail sales volume of 10.47 million units, +4.8% year over year, achieving retail sales of 8.4 billion yuan, or +2.7% year over year, highlighting overall resilience. At the company level, the revenue of H1 range hoods/gas stoves was -2.85%/-1.17% year-on-year in '24. Although it slightly outperformed the market, the share advantage was still stable.

According to Aowei Cloud Network data, 24H1's retail sales share of offline range hoods/gas stoves was 31.9%/31.3% respectively, and the retail sales share of online two-piece smoker sets reached 28.2%, ranking first in the industry. In terms of engineering channels, according to data from the National Bureau of Statistics, the completed H1 residential area in '24 was 0.193 billion square meters, a year-on-year ratio of -21.70% due to the high base figure brought about by last year's “building guarantee” policy. According to “AVC Real Estate Big Data”, H1 Fine Decoration opened 0.3015 million new units in '24, compared to -19.2%; the penetration rate of refinement projects was 35.1%, down 1.7 percentage points from the same period last year. The company continues to optimize the customer structure, strictly control channel risks, and actively broaden categories to drive large-scale sales; according to the Aowei Real Estate Report, the “boss” range hood market share in the decoration channel is 23.4%, ranking second in the industry.

The 24H1 net interest rate level remains steady. In '24, H1 achieved a gross sales margin of 48.88%, -3.05 pcts year over year. In terms of the period expense ratio, the company's 24-year H1 sales expense ratio was 25.16%, -2.42pcts; the management expense ratio was +0.41pct to 4.53% year over year, and the financial expense ratio was -0.62 pct to -2.02% year over year. In addition, the 24H1 R&D expense ratio increased slightly by 0.27pct to 3.77% year on year, and finally recorded the company's 24H1 net sales margin of 15.84%, or -0.84pct year on year.

The profit forecast was lowered, and the mid-term dividend ratio was further increased. It has long-term allocation value, and the “buy” investment rating is maintained. Considering weak industry demand, we lowered our previous profit forecast for the company. We expect to achieve net profit of 1.621/1.706/1.802 billion yuan (previous value was 1.909/2.105/2.337 billion yuan) in 24-26, respectively, -6.5%/+5.2%/+5.6% year-on-year, corresponding to the current price-earnings ratio of 11/10/10 times, respectively. In the same period, the company announced the implementation of the 2024 mid-term dividend. It plans to distribute a cash dividend of 5 yuan (tax included) to all shareholders for every 10 shares, totaling about 0.472 billion yuan. The dividend amount accounts for 62.2% of the net profit returned to the mother for the period, which is a further increase from the previous period. Assuming that the company pays a dividend of 0.5 yuan per share, twice during the middle and end of the year, with a total dividend of 1 yuan per share for the whole year, the corresponding current dividend rate is 5.46%. The kitchen appliance industry where the company is located is a more mature segment of home appliances. The overall market scale performance is steady, while the company has a stable share advantage in traditional categories and actively expands emerging categories. At the same time, considering the company's high dividend attributes, it has long-term allocation value, and maintains a “buy” investment rating.

Risk warning: the risk that real estate data is sluggish and demand falls short of expectations; industry competition increases risk; risk of fluctuating raw material prices.