Q2 Revenue growth was resilient, and after deducting a slight decline in non-net profit. 2024H1 achieved revenue of 3.91 billion yuan, +20.0% YoY, net profit to mother 0.244 billion yuan, YoY -15.4%, net profit not attributable to mother 0.235 billion yuan, +7.5% YoY, EPS 0.35 yuan/share. At the same time, the company plans to pay 10 mid-term dividends of 2.8 yuan (tax included); of these, Q2 achieved revenue of 2.43 billion yuan in a single quarter, +12.7% YoY, net profit to mother 0.16 billion yuan, YoY- 27.3%, net profit not attributable to mother of 0.15 billion yuan, -3.7% YoY. Revenue growth remained resilient, and profit was mainly pressured by 1) the reduction in risk, compounded by an increase in impairment accruals, and a year-on-year decline in revenue profit; 2) the year-on-year decrease in investment income and the impact of changes in the fair value of securities investment achieved investment income of 0.018 billion yuan during the reporting period, a decrease of 0.03 billion yuan over the previous year, while holding a change in the fair value of Lianxiang shares of -0.023 billion yuan.

Township sinking+small B channel expansion continues to contribute to board growth, and whole-house customization continues to buck the trend. The 2024H1 decoration materials/custom home furnishing business achieved revenue of 3.28/0.59 billion yuan, or +29.0%/-11.4%, of which the board/board brand royalty/other decorative material revenue in the decoration materials business was 2.15/0.22/0.92 billion yuan, +41.5%/-11.6%/+17.7%. The main reason for the significant increase in the board business over the same period last year was that the company continued to promote multi-channel operation, accelerate the expansion of the township market layout and furniture factory channel while actively controlling A/B The share of the revenue structure. As of 2024H1, there were 4,322 decoration materials stores, including 1,168 township stores, 742 township stores completed investment during the reporting period, 421 township store construction completed, and 20,000 cooperative furniture factory customers; in the custom home furnishing business, whole-house customization/Yufeng Hantang's revenue was 0.3/0.134 billion yuan respectively, +22.0%/-48.6%. Whole-house customization continued to develop and maintain contrarian growth, while continuing to stabilize and control Yuhan Fengtang's engineering business scale, and the revenue share declined sharply.

The cost ratio was clearly optimized, and the overall payout ratio remained at a good level. The 2024H1 comprehensive gross profit margin was 17.5%, -2.9 pp year on year, mainly affected by changes in the A/B revenue structure. The cost ratio for the period was 7.0%, -2.8pp, of which the sales/management/finance/R&D expenses ratio was -0.5pp/-1.7pp/-0.4pp/ -0.2pp. The reduction in management expenses was mainly due to the year-on-year decrease in equity incentive expenses. 2024H1 net operating cash flow of $0.28 billion, -44% year over year, payment/cash ratio of 1.0/0.95, 1.08/0.92 for the same period of the previous year, of which Q2 net operating cash flow was 1.16 billion yuan in a single quarter, +101% year over year, and 1.01/0.55, 1.02/0.78 for the same period last year, mainly affected by fluctuations in payment rhythm, and overall repayment; total accounts receivable and accounts receivable financing+other receivables + contract assets as of 2024H1 1.07 billion yuan, -22.4% YoY

Risk warning: Real estate recovery falls short of expectations; channel expansion falls short of expectations; accounts receivable recovery falls short of expectations Investment suggestions: Multi-channel expansion contributes to growth, high dividend value continues to be prominent, maintaining the “superior market” channel sinking and the small B channel driving the board business, as well as the breakthrough growth of the customized home furnishing business based on the advantages of board materials. Considering the impact of weak overall demand and impairment calculation, the 24-26 EPS was lowered to 0.84/1.01/1.16 yuan/share (previous value 0.91/1.04/1.18 yuan/share), corresponding PE to 10.9/9.1/8.0x. The company continued to pay attention to shareholder returns and actively implemented mid-term dividends. The dividend rate reached 94.2%, and the high dividend value continued to stand out, maintaining the “superior to the market” rating.