Incident: The company released its three-quarter report for 2024. In the first 24 years, the company achieved operating income of 9.48 billion yuan, -2.7% YoY; net profit to mother was 0.73 billion yuan, or -36.4% YoY. Among them, 24Q3 achieved operating income of 3.13 billion yuan, or -6.2% year-on-year; net profit to mother of 0.13 billion yuan, or -54.6% year-on-year.

The main household business is quiet and needs are being repaired, and the transformation of the Intelligent Experience Center is progressing smoothly. Due to the adverse effects of downward pressure on real estate, downstream demand in the home furnishing industry was damaged. At the same time, the company's home furnishing store business was under pressure in the short term due to rent relief for some merchants. On the one hand, the company implements the “one store, two systems” and “sales sharing” investment strategies to promote a steady increase in the investment rate and improve the operating conditions of the factory; on the other hand, it is actively transforming towards a smart home experience center. The 24Q3 Beijing Easyhome Smart Home Experience Center Yuquanying and North Fourth Ring Road stores have been opened one after another. The customer flow, contract conversion rate, and sales have steadily increased. The smart home transformation progressed smoothly along with the gradual clearing of the home furnishing industry, and the dependence of home furnishing brands on leading channels gradually increased. As a leading home chain store, the company's competitive advantage is expected to become more obvious in the future.

Big household+day consumption, shopping malls have built the company's second growth curve. As the company's second track, the shopping center in China Business World uses the two companies' high-quality credit endorsements to complement each other's advantages. Currently, the company has opened 4 “China Business World Heavy” shopping centers in Changchun, Hohhot, and Wuhan, and is expected to provide new performance growth points for the company in the future.

Digitalization+intelligence, focusing on upstream and downstream empowerment of the industrial chain. The company has built three major digital intelligence platforms for the home industry, “Dongwo”, “Actually Designer”, and “Actually Smart Home”. On the one hand, it provides richer digital solutions and accurate marketing services for pan-home furnishing merchants; on the other hand, the construction of the digital platform helps the company further implement subsidy policies such as “trade-in” to increase customer acquisition rates and customer conversion.

Marginal optimization of the cost rate for the period. 24 years ago, the company's gross profit margin was 29.3%, -5.7pct year on year; management expense ratio/sales expense ratio/financial expense ratio were 3.9%/8.9%/8.1%, respectively, -0.2/-0.9/ 0.4 pct year over year. In 24 years ago, the company's net profit margin was 7.7%, 4.1pct year on year; of these, the net profit margin for single 24Q3 was 4.1%, or 4.4pct year on year.

Investment advice: The company is a leader in the domestic pan-home furnishing industry, steadily expanding offline home furnishing stores, steadily expanding the shopping center model to create a second growth curve, and efficiently developing through digital intelligence transformation. The future growth space is broad. The company is expected to achieve basic earnings per share of 0.18/0.20/0.22 yuan in 2024725726. The closing price of 2.78 yuan on October 30 corresponds to PE of 16X/14X 12×, maintaining the “recommended” rating.

Risk warning: the risk of macroeconomic fluctuations, the risk of new business development falling short of expectations, and the risk of increased market competition.