HEILAN HOME(SH:600398) GF SECURITIES·2024-10-08 03:41Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 8.52 CNY per share, compared to the current price of 7.58 CNY [4][9]. Core Views - The strategic partnership with JD.com has been established, with the first JD Outlet store opening at Hailan Feima Water City, aiming to explore new growth avenues. The store has seen an average daily foot traffic of over 30,000 during the National Day holiday [2]. - The second quarter performance was below expectations, with revenue and net profit for Q2 2024 declining by 5.88% and 14.42% respectively. The cautious outlook for Q3 is noted, although improvements are anticipated in Q4 due to favorable policy changes and the impact of the JD Outlet [2][3]. - Earnings per share (EPS) forecasts for 2024, 2025, and 2026 are projected at 0.57 CNY, 0.64 CNY, and 0.76 CNY respectively, with a reasonable valuation based on a 15x PE ratio for 2024 [2][9]. Financial Summary - Revenue for 2024 is expected to be 22.114 billion CNY, with a growth rate of 2.73%. The net profit is projected at 2.727 billion CNY, reflecting a decline of 7.61% [3][9]. - The company’s revenue breakdown includes direct sales, franchise operations, online sales, and group purchasing, with varying growth rates and profit margins across these segments [7][8][9]. - The EBITDA for 2024 is estimated at 5.067 billion CNY, with a slight decrease from the previous year [3][9]. Revenue Projections - Direct sales are projected to generate revenues of 4.806 billion CNY in 2024, with a growth rate of 6.02% [7]. - Franchise revenue is expected to decline to 9.367 billion CNY in 2024, a decrease of 12.31% [8]. - Online sales are forecasted to grow significantly, reaching 4.887 billion CNY in 2024, with a growth rate of 50% [8][9]. Profitability Metrics - The gross margin for direct sales is expected to remain stable at 62.61%, while the online business is projected to have a gross margin of 48.65% [7][8]. - The net profit margin is anticipated to be around 12.5% for 2024, with a return on equity (ROE) of 14.4% [3][9].