Incident: The company released its semi-annual report. 24H1 achieved operating income of 8.583 billion yuan, a year-on-year decrease of 12.81%; realized net profit of 0.99 billion yuan, a year-on-year decrease of 12.61%; and realized net profit deducted from non-mother of 0.776 billion yuan, a year-on-year decrease of 27.54%.

Looking at a single quarter, 24Q2 achieved operating income of 4.962 billion yuan, a year-on-year decrease of 20.91%; realized net profit of 0.772 billion yuan, a year-on-year decrease of 21.26%; realized net profit deducted from non-mother of 0.634 billion yuan, a year-on-year decrease of 32.72%.

24H1's consolidated gross margin was 32.57%, an increase of 1.05pct over the same period. The cost rate for the period was 22.01%, an increase of 3.99pct. Among them, sales/management/R&D/finance expenses were 11.39%/7.01%/4.87%/-1.27%, respectively, with year-on-year changes of +2.44pct/+0.57pct/+0.41pct/+0.56pct.

By product, cabinets/wardrobes and supporting furniture products/bathroom/wooden doors/others achieved revenue of 25.57/44.19/0.503/0.497/0.425 billion yuan, a year-on-year change of -16.76%/-18.63%/+9.29%/-13.61%/+234.08%. The gross margin was 29.22%/36.67%/24.99%/23.83%/21.06%, respectively, with year-on-year changes of -1.05pct/+3.08pct/-1.35pct/+2.83pct/-19.11pct.

Looking at each channel, direct-run stores/dealers/bulk business/others achieved revenue of 3.35/6.395/1.499/0.173 billion yuan respectively, a year-on-year change of +17.27%/-17.58%/+0.97%/+27.16%. The gross margin was 53.33%/32.44%/25.22%/40.70%, respectively, with year-on-year changes of -4.70pct/+1.32pct/-2.82pct/+3.27pct. By the end of 24H1, the company had a total of 8,329 stores. Among them, there were 5644/1037/954/539/155 stores for the Opal brand, Opponix brand, and other brands, respectively.

Profit forecast and rating: We lowered the company's net profit for 24-25 from 3.2/3.5 billion yuan to 2.9/3.1 billion yuan. The current closing price corresponds to PE 9/8 times, respectively. Referring to comparable companies, the PE valuation is 12-14 times in 24 years. The corresponding reasonable value range is 56.7-66.1 yuan, giving it a “superior to the market” rating.

Risk warning: downside risks in the real estate industry, risk of category and channel expansion falling short of expectations, risk of fluctuations in raw material prices, and intensification of industry competition.