1、租赁及管理服务毛利率企稳，三大数智化工具保持快速发展趋势。1）分产品来看，租赁及其管理服务业务/商品销售实现收入30.27/28.04 亿元，同比-8.51%/+16.92%，毛利率同比+0.21ppt/-2.32ppt 至50.91%/9.39%，受减租影响，租赁及管理服务收入下滑，同时固定租赁成本下滑，带动毛利率企稳。加盟管理业务/装修/贷款保理利息实现收入2.09/1.22/0.19 亿元，同比-20.80%/-32.28%/-40.28%；2）分渠道来看，截至1H24，公司在营家居卖场较23 年减少5 家至409 家，其中直营卖场85 家，加盟卖场324 家，上半年新开门店32 家；“洞窝”实现GMV466 亿元，同比+11.8%；居然设计家全球注册用户数量超1616 万，同比+19%，设计案例数超3522 万，同比+16%，模型数量超1391 万，同比+23%；居然智慧家实现营收22.5 亿元，同比+30.6%，较23 年底授权门店新增17 家至128 家。1H24 results are in line with our expectations
The company announced 1H24 results: 1H24 achieved revenue of 6.347 billion yuan, a year-on-year decrease of 0.88%, and net profit to mother of 0.603 billion yuan, a year-on-year decrease of 30.44%. After deducting non-return net profit of 0.675 billion yuan, a year-on-year decrease of 22.97%. The results were in line with our expectations. On a quarterly basis, the company achieved revenue of 3.137/3.21 billion yuan in 1Q/2Q24 respectively, -3.38%/+1.69% year-on-year, and net profit of 0.349/0.254 billion yuan, respectively, and -22.88%/-38.71% year-on-year respectively.
Development trends
1. The gross margin of leasing and management services has stabilized, and the three major intelligent tools have maintained a rapid development trend. 1) By product, leasing and management service business/product sales achieved revenue of 3.027/2.804 billion yuan, -8.51%/+16.92% year-on-year, and gross margin +0.21pp/ -2.32ppt to 50.91%/9.39% year over year. Affected by rent cuts, rental and management service revenue declined, while fixed leasing costs declined, driving the gross margin to stabilize. Franchise management business/renovation/loan factoring interest achieved revenue of 0.209/0.122/0.019 billion yuan, -20.80%/-32.28%/-40.28%; 2) By channel, as of 1H24, the number of home furnishing stores operated by the company decreased by 5 to 409 compared to 23, including 85 direct-run stores, 324 franchise stores, and 32 new stores opened in the first half of the year; “Dongwo” achieved GMV46.6 billion yuan, +11.8% over the same period last year; Easydesign achieved global registered users The number exceeded 16.16 million, +19% year over year, the number of design cases exceeded 35.22 million, +16% year over year, and the number of models exceeded 13.91 million, +23% year over year; in fact, smart homes achieved revenue of 2.25 billion yuan, +30.6% year over year, an increase of 17 to 128 authorized stores at the end of 23.
2. The gross margin declined slightly, and the cost ratio was well controlled. Under the restructuring of business revenue, product sales revenue grew rapidly, leading to a decline in gross margin. The company's 1H24 gross margin was 33.32%, -3.89ppt year over year. The company strengthened cost control management. The company's expense ratio for the 1H24 period was 21.1%, -2.06ppt. Among them, sales/management+R&D/finance expenses rates were 8.9%/4.14%/8.06%, respectively, -0.52pp/ -0.58pp/ -0.96ppt. Under the combined influence, 1H24 net interest rate was 9.5%, year-on-year -4.03ppt.
3. Huawei and Volcano Engine reached a strategic cooperation to drive a new trend in the company's intelligent development. The company reached a strategic cooperation agreement with Huawei to adapt the three apps Designer, Dongwo, and Smart Home under Easyhome with Hongmeng to create a “person, car, and home” consumer experience scenario. It is also strengthening the development of offline Huawei mobile phone and car sales scenarios in the company's stores to provide a new consumption scenario integrating “people, cars, and homes.” In the future, Volcano Engine will continue to enable the digital transformation of the company's home improvement and home furnishing enterprises through AI and large model technology, and continue to drive the company's digital intelligence transformation and development. Recently, various provinces have successively promulgated trade-in policies, which we believe will effectively drive a recovery in customer traffic in home furnishing stores, and it is expected that the company's performance will recover in the future.
Profit forecasting and valuation
Considering the pressure on home improvement demand, we lowered our 2024/2025 profit forecast by 21%/21% to 1.13/1.23 billion yuan, corresponding to 14/13 times the price-earnings ratio for 2024/2025. Maintain outperforming industry ratings.
Considering declining market risk appetite and pressure on home improvement demand, we lowered our target price by 21% to 3.3 yuan, corresponding to a price-earnings ratio of 18/17 times 2024/2025, corresponding to 28% upward space.
risks
Market competition intensified, channel expansion risks, and new business development fell short of expectations.
