Key points of investment

Oupai Home Announces Dividend Plan for the Next 3 Years

The company announced a profit distribution target for the next three years (24-26): the total cash dividend distribution each year is not less than 1.5 billion yuan. Based on the closing market value of 27.1 billion on September 20, the dividend ratio is 5.5%. The company has plenty of cash on its accounts, strong ability to collect cash, and has the ability to pay dividends continuously.

Company side: Firmly focus on traffic advantages, strengthen retail power, and Oupai continues to lead strategically as a leading household leader:

1) In the context of decentralized traffic, we have the courage to optimize traditional single product stores and expand retail stores (24H1 reaches 850, net increase of 200+), accelerate the pace of household transformation of the marketing system, fully integrate resources, effectively dilute comprehensive drainage costs, and improve terminal profit levels.

2) Keep up with the trend of online traffic and help terminals with mature customer acquisition systems. Vigorously develop e-commerce channels, break new media account matrices, content operations, etc., and achieve an online business growth of more than 10%; centralized e-commerce strengthens marketing models such as short video and live streaming to achieve +10% of online customers and empowers more than 4,000 dealers; explore the joint operation of localized e-commerce and dealers to enable various dealers in more than 100 cities to carry out localized joint launches, and online customer acquisition is +600% year over year.

3) Focus on the dealer business model, comprehensively reduce institutional burdens and increase subsidies to improve dealer profitability.

4) At the same time, the restructuring and reform of the internal incentive mechanism is being actively promoted to stimulate the vitality of the system.

Industry side: The gold nine silver ten plus trade-in is expected to form a catalyst

1) The traditional home improvement season is gradually entering the golden, nine, and silver peak season. Early orders that were delayed due to spending power are expected to be reflected.

2) Furthermore, since August, Hubei, Shanghai, Shenzhen and other provinces and cities have successively issued trade-in subsidy rules, with strong support (for example, subsidies of 2000-3000 yuan for single furniture products, 0.02-0.03 million yuan per contract amount, etc.), and it is expected that the stimulus for consumption can be expected in the future.

Profit forecasting and valuation

Oupai Home Furnishing is a leader with strong certainty in increasing its share in the home furnishing industry. We are optimistic that the company will continue to expand into the fields of software, main and auxiliary materials, and reap steady growth in performance from it, with leading information systems as the core and leading information systems as a bridge. The estimated 24-26 revenue is 20.216 billion (-11.26%) /21.19 billion (YoY +4.82%) /22.839 billion (YoY +7.78%), net profit 2.669 billion (-12.07% YoY) /2.782 billion (YoY +4.22%) /2.968 billion (YoY +6.67%), corresponding PE is 10.17X/9.75X/9.14X, Maintain a “buy” rating.

Risk warning: Channel construction falls short of expectations, real estate regulation exceeds expectations