The company's 1H2024 revenue decreased by 0.88% year on year, and net profit to mother decreased by 30.44% year on August 29. On August 29, the company announced its 2024 semi-annual report: 1H2024 achieved operating income of 6.347 billion yuan, a year-on-year decrease of 0.88%, and realized net profit of 0.603 billion yuan, equivalent to fully diluted EPS of 0.10 yuan, a year-on-year decrease of 30.44%, and realized net profit without return to mother of 0.675 billion yuan, a year-on-year decrease of 22.97%.

Looking at the single-quarter split, 2Q2024 achieved operating income of 3.21 billion yuan, a year-on-year increase of 1.69%, and achieved net profit of 0.254 billion yuan, which translates into fully diluted EPS of 0.04 yuan, a year-on-year decrease of 38.71%, and realized net profit without deduction of 0.302 billion yuan, a year-on-year decrease of 33.30%.

The company's 1H2024 comprehensive gross margin decreased by 3.89 percentage points, and the cost ratio decreased by 2.06 percentage points during the period 1H2024. The consolidated gross margin of 1H2024 was 33.32%, down 3.89 percentage points from the previous year. Looking at the single-quarter split, 2Q2024's comprehensive gross margin was 29.99%, down 5.19 percentage points from the previous year.

The 1H2024 company's expense ratio for the period was 21.10%, down 2.06 percentage points year on year. Among them, sales/management/finance/R&D expenses were 8.90%/3.92%/8.06%/0.23%, respectively, with year-on-year changes of -0.52/-0.34/ -0.96/-0.244 percentage points, respectively. The 2Q2024 company's expense ratio for the period was 21.58%, down 4.65 percentage points year on year. Among them, sales/management/finance/R&D expenses were 9.79%/3.50%/8.10%/0.19%, respectively, with year-on-year changes of -1.53/ -0.94/ -1.630/ -0.55 percentage points, respectively.

Implementing the “one store, two systems” investment strategy, the shopping center business developed rapidly until June 30, 2024. The company had 409 home furnishing stores (including 85 direct-run stores and 324 franchise stores), 4 shopping malls in China Business World, 4 Hyundai department stores, and 163 supermarkets of various types.

In terms of home furnishing stores, the company fully implemented the “one store, two systems” investment strategy in the first half of 2024, accounting for 65.4% of the new investment area through the “sales share” model. At the same time, 1H2024 is actively expanding cooperative brands, adding 216 new cooperative brands. In terms of shopping centers, shopping malls achieved sales of 1.267 billion yuan in the first half of 2024, an increase of 193.7% year on year, and the number of visitors reached 20.44 million, an increase of 156.3% year on year.

On the Dongwo side, as of June 30, 2024, Dongwo had a total of 1,016 online stores, up 82.4% year on year; more than 0.11 million registered users, up 66.7% year on year; the number of registered users exceeded 31.5 million, up 79.4% year on year; and achieved platform transaction volume (GMV) of 46.6 billion yuan in the first half of the year, an increase of 11.8% year on year.

Maintain profit forecasts and maintain “gain” ratings

The company's profit performance is basically in line with our previous expectations. We maintain our 2024/2025/2026 EPS forecast of 0.18/0.19/ 0.20 yuan. The company is continuously improving its investment strategy, increasing the degree of online transformation. The shopping center business is developing rapidly and maintaining a “gain” rating.

Risk warning: Competition within the industry intensifies, new business development falls short of expectations, and the real estate industry chain recovery process falls short of expectations.