Q2 The year-on-year revenue growth rate was corrected, profit declined due to sales model reform, and the purchase rating was maintained

Easyhouse released its semi-annual report, and 24H1 achieved revenue of 6.35 billion yuan (yoy -0.9%) and net profit of 0.6 billion yuan (yoy -30.4%) to mother. Among them, Q2 achieved revenue of 3.21 billion yuan (yoy +1.7%) and net profit of 0.25 billion yuan (yoy -38.7%). The correction in Q2 revenue growth mainly benefited from the increase in the investment rate under the “sales share” model, but also because the innovation model is in its infancy, profitability was affected to a certain extent.

In the context of sales model reform and innovation, the company is expected to form a community of interests with dealers to promote sales growth. 24H1 achieved sales of 55.9 billion yuan, an increase of 16.2% over the previous year. With the further implementation of the “sales share” model, we believe that the company's market share is expected to continue to increase. Considering that the innovative model had a slight drag on gross margin in the short term, we lowered the company's 24-26 net profit to 1.24, 1.37, and 1.48 billion yuan (previous values 1.4, 1.58, 1.7 billion yuan). Referring to the comparable company Wind, the 24-year average of 16 xPE was given the company 16 x PE for 24 years, with a target price of 3.20 yuan (previous value of 3.74 yuan) to maintain the purchase rating.

The development of the main store business has stabilized. The investment promotion rate has been boosted through sales model reforms, and the company continues to optimize and adjust its home furnishing stores when post-cycle real estate consumption is weak.

In 24H1, the company opened 2 new direct-run stores and transferred 3 franchised stores; 7 new franchised stores were opened and 14 closed. As of 24H1, the company has opened a total of 85/324 direct-operated/franchised stores, and the total number of stores has gradually stabilized. At 24H1, the company pioneered the “sales share” rent model in the industry to form a benefit-sharing relationship with merchants, which effectively stimulated the willingness of merchants to enter and operate. In 24H1, the investment area entered through the sales sharing model accounted for 65.4% of the new investment area, and the company's sales increased 16.2% year on year.

The transformation of digital intelligence continues to be promoted, and the quality of operations is further improved

Easyhome is a pioneer in the digital intelligence reform of domestic home furnishing stores. It uses Dongwo, Easyhouse Designers, and Easyhome as starting points to improve the quality of home furnishing store operations in all aspects. On the Dongwo side, the company focused on “high-quality content” and “accurate traffic” as the core to continuously improve its digital capabilities. 24H1 achieved a platform transaction volume of 44.6 billion yuan, an increase of 11.8% over the previous year. Designers actually use AI technology as the core to empower designers and reduce overall design costs. As of 24H1, the number of registrants worldwide exceeded 16.16 million. Actually, smart homes connect smart devices such as mobile phones, cars, and home appliances by building a general smart home system as a hub. As of 24H1, the number of registered users of digital home apps has exceeded 0.2 million.

Let's wait for the demand for home consumption to rise. We can see that Easyhome continues to reform and sail 24H1. Weak demand for household consumption has clearly intensified competition in the industry. Easyhome is the leader. On the one hand, it continues to implement digital reforms to improve the quality of store operations and empower store merchants. On the other hand, it actively promotes sales model reform to benefit and motivate merchants, and form a positive win-win cycle.

Risk warning: Real estate policy implementation falls short of expectations, consumer confidence recovery falls short of expectations, competition in home furnishing stores intensifies