The company publishes annual reports and quarterly reports
The 24Q1 revenue of 3.1 billion was reduced by 3%, the amount due to the mother of 350 million was reduced by 23%, after deducting 370 million, the same decrease by 12%; the income of 23A was 13.5 billion yuan, the same decrease of 21%, and the same decrease of 28% after deducting non-1.2 billion yuan.
The decline in performance is due to the fact that home building materials are a consumer category with a relatively high customer unit price and a relatively long decision-making chain. The recovery process was relatively slow after certain external factors affected. Merchants are affected by specific external factors, and operations are under great pressure. Based on market dynamics, in order to support the continuous operation of merchants, the company continued to reduce part of the rent and management fees for qualified merchants, leading to a phased decline in rent income and management fee income with high gross profit levels.
As of December 31, 2023, the company operated 414 home furnishing stores in 29 provinces, regions and cities in China, including 86 direct stores and 328 franchisees.
In '23, the company's revenue from leasing and franchise management business was 6.9 billion yuan, accounting for 51%, a decrease of 12%, and a gross profit margin of 49%, a decrease of 11pct; decoration service revenue of 400 million yuan, accounting for 3%, an increase of 13%; product sales revenue of 5.6 billion yuan, accounting for 41%, an increase of 32%; and a gross profit margin of 10%, a decrease of 3 pcts.
The company pioneered digital transformation in the home furnishing industry, and has completed the construction of three digital intelligence platforms for the home industry, “Dongwo”, “Easyhouse”, and “Easyhome”. Among them, “Dongwo” provides global solutions from infrastructure to scene applications for home furnishing stores, factories, dealers and shopping guides; “EasyHome” is a smart lifestyle service platform created by the company and Ali to adapt to the advent of the Internet of Everything era.
Innovating the “sales sharing” and “one store, two systems” investment models, and obtained good pilot results. The company responded promptly under changes and took the lead in proposing a “one store, two systems” investment model with fixed rent and sales sharing. On the one hand, it formed a risk-sharing and benefit-sharing relationship with merchants; on the other hand, it broke through the company's revenue ceiling under the traditional fixed rent model.
The “unified cashier” model accumulated by the company in the early stages and the “Dongwo” system, a digital industrial service platform, provided a strong foundation for the company's investment promotion model innovation. In February 2023, the Harbin Pioneer Store was first piloted. By the end of 2023, the investment rate of Pioneer Store had increased to 98%. The Sichuan Neijiang store achieved rapid investment promotion through the implementation of a sales sharing model. From holding an investment promotion conference on June 12, 2023 to opening on December 16, 2023, the investment rate was 98%, successfully introducing many domestic first-tier brands.
The shopping center business model was refined and the second growth curve of the company's physical stores steadily expanded. The company opened the first “Chinese Business World” shopping center in Changchun City at the end of 2021. After two years of development, Changchun's “China Business World” had sales of 633 million in 2023, an annual passenger flow of 10.947,600 people, and a occupancy rate of 98.2% by the end of 2023. It has become one of the shopping malls most loved by consumers and brands in Changchun. Following Changchun's “China Business World”, the company successively opened the Wuhan Optics Valley Store, Hohhot Wanzheng Store, and Wuhan Meridianmao Shopping Center, all with good results.
The three digital intelligence transformation tools are more mature. As a result of digital intelligence transformation, Dongwo continues to improve digital capabilities and accelerate the construction and promotion of digital intelligence industry service platforms around “high-quality content” aggregation and “accurate traffic” as the core. By the end of 2023, the total number of online stores in Dongwo reached 934, an increase of 173.1%. More than 100,000 merchants entered the market, an increase of 101%. The number of registered users exceeded 25 million, an increase of 95.48%. The average monthly activity was 3.9051 million, an increase of 316.7%. The annual GMV was 97.4 billion, an increase of 173%. In addition, Dongwo also opened the Macau Station and 2 overseas branches in Singapore and Cambodia in 2023, creating a solid digital foundation for the company's international business development.
Actually, the designer's 2023 business focused on cloud design tool business, 3D business, and precision marketing business with AI design platforms as the core. In the commercial exploration of 3D+AI+VR technology, designers can actually continuously optimize large models of industries and scenes based on multi-modal large model technology, focus on Wensheng map, Tusheng video, and Tusheng video capabilities, and provide a decoration renderings generation service that can be obtained as soon as 3 seconds.
Smart Home actually opened 57 new stores in 2023, with annual sales exceeding 4.4 billion dollars, an increase of 58% over the same period. In fact, the commercial positioning of smart homes has been refined and upgraded. By constructing two interactive centers, a “digital home brain” and a “digital home app”, and a general smart home system that crosses brands, ecosystems, and terminals, it connects various smart terminal devices such as mobile phones, automobiles, and home appliances to provide consumers with a rich and convenient smart home living experience. By the end of 2023, there were more than 200 cooperative brands connected to EasyHome, with over 120,000 connected devices, 117 stores in 15 provinces and cities across the country, and more than 200,000 registered app users.
Adjust profit forecasts to maintain “buy” ratings
The company is one of the few enterprises in the domestic market that have the power to lay out the entire pan-home industry chain. It has established a closed loop of pan-home service ecology covering interior design, decoration and construction, home sales, smart homes, smart logistics, home delivery services, etc., and integrates high-frequency consumption scenarios such as department stores, shopping malls, lifestyle supermarkets, etc., to satisfy consumers with a happy, simple and efficient one-stop shopping experience.
“Asset light and refinement” is a prominent feature of the company's operations. By expanding the market through an “asset-light model” based on direct rental property stores and franchise stores, the company is able to establish a nationwide retail chain network more quickly when capital requirements are relatively small.
The company has established a systematic and diversified marketing model and continues to iterate and innovate. Not only has it reached good strategic cooperation with public domain traffic platforms such as Tmall, Tencent, Byte, Baidu, and Xiaohongshu, but the company's private traffic platform operations are also becoming more mature. Official accounts and store general manager accounts are in a leading position in the home furnishing industry and have extensive market influence.
Considering the relatively slow recovery process of home building materials after being affected by external factors, we adjusted our profit forecast. We expect revenue of RMB 150.5/164.6/RMB 17.82 billion for 24-26 (RMB 171.5/18.92 billion yuan, respectively), net profit to mother of RMB 14.7/15.7/1.72 billion (24-25 years ago, respectively, RMB 25.2/2.84 billion), EPS was 0.23/0.25/0.27 yuan/share, respectively. The corresponding PE is 13/12/11X, respectively .
Risk warning: risk of macroeconomic fluctuations; increased risk of industry competition; risk of business development in home furnishing stores; risk of emergencies, etc.