The company released its 2024 semi-annual report. In 2024, H1 achieved operating income of 0.713 billion yuan, a slight decrease of 0.86% over the previous year. 24H1 gross margin increased by 5.20 pcts, and the net interest rate decreased slightly by 0.78 pcts due to increased expenditure during the period.

The company's smart home ecosystem layout is perfect, and short-term fluctuations in performance do not change long-term advantages. The omni-channel strategy is deepened, and online and offline integration promotes performance growth.

The smart home ecosystem layout is perfect, and short-term fluctuations in performance do not change long-term advantages. The company focuses on smart homes, especially to build competitive advantages in the field of smart drying and smart locks. The product line covers electric towel racks, smart curtain systems, smart lighting and smart gateways, etc., to create a comprehensive smart home ecosystem. The goal is to provide a one-stop intelligent living experience. In 2024, H1 achieved operating income of 0.713 billion yuan, a slight decrease of 0.86% year on year; net profit to mother was 0.144 billion yuan, down 4.48% year on year.

24H1 gross margin increased, and net interest rate declined slightly due to increased cost investment during the period. In '24, H1's gross margin reached 54.42%, up 5.20 pcts year on year; net profit margin was 20.11%, down 0.78 pcts year on year. Among the expenses for the period, the sales expenses rate was 23.27%, up 5.11 pcts from the previous year, mainly due to the increase in e-commerce platform promotion expenses and advertising investment. The management cost ratio was 6.25%, up 0.96 pcts year on year; the R&D cost ratio was 3.44%, up 0.56 pcts year on year.

The omni-channel strategy is deepened, and online and offline integration promotes performance growth. The company uses an omni-channel sales strategy, taking a two-pronged approach of online and offline to further expand market coverage. Implement the “Frontier Renewal” and “Building a Benchmark Retail City” plan, accurately recruit investments, and quickly penetrate the low-tier market. Improve the efficiency of retail operations through standardized store management and digital tools. In new channels such as hardware stores, new retail, and KA, the company continues to strengthen its layout and consolidate its offline advantages. For smart lock channels, the company optimizes resource allocation, improves dealer quality, and ensures the steady development of the sinking market. In order to enhance dealers' operational capabilities, the company provides regional leader support, professional training, marketing activities and supporting policies to improve the professional service standards of dealers. In online channels, the company not only maintains a lead on mainstream e-commerce platforms, but also explores live broadcasts and short videos on emerging platforms such as Douyin, increasing customer stickiness, and continuously winning the top of the 618 promotion.

Profit forecast and investment suggestions: The company is a leader in the drying industry. The smart drying product channel upgrade period has exploded, the smart home ecological layout is perfect, and long-term expectations maintain a growth advantage. The company's 2024 H1 performance was under pressure, slightly below expectations, and we revised our expectations for 2024 and 2025 results accordingly. The company's net profit from 2024 to 2026 is expected to be 0.36/0.41/0.45 billion yuan, with year-on-year changes of +11%/+13%/+10%, respectively, corresponding to a 24-year PE of 13X, maintaining a “highly recommended” investment rating.

Risk warning: Risk of fluctuations in the real estate market; risk of category expansion falling short of expectations.