SCSF(SH:600779) SINOLINK SECURITIES·2025-04-30 04:54Investment Rating - The report maintains a "Buy" rating for the company, with a projected EPS of 2.88, 3.09, and 3.48 for the years 2025, 2026, and 2027 respectively, corresponding to a PE valuation of 15.8, 14.7, and 13.0 times [5][12]. Core Views - The company reported a revenue of 5.22 billion RMB for 2024, a year-on-year increase of 5.3%, and a net profit attributable to shareholders of 1.34 billion RMB, up 5.7% year-on-year. For Q1 2025, revenue was 960 million RMB, a 2.7% increase year-on-year, with a net profit of 190 million RMB, up 2.1% year-on-year, aligning with market expectations [2][5]. - The company is restructuring its product strategy to establish a dual-brand system with "Shui Jing Fang" and "Di Yi Fang," focusing on a "twin star" strategy within the Shui Jing Fang brand [3]. - The new channel revenue for 2024 was 530 million RMB, a 10% increase year-on-year, while wholesale agency revenue was 4.5 billion RMB, up 2% year-on-year. In Q1 2025, new channel revenue surged to 290 million RMB, a 184% increase year-on-year, while wholesale agency revenue decreased by 20% [3][4]. Summary by Sections Financial Performance - In 2024, the net profit margin increased by 0.1 percentage points to 25.7%, with a slight decrease in gross margin by 0.4 percentage points. For Q1 2025, the net profit margin decreased by 0.1 percentage points to 19.8%, with an increase in gross margin by 1.5 percentage points [4]. - The company expects revenue growth rates of 4.0%, 6.2%, and 11.2% for 2025, 2026, and 2027 respectively, with net profit growth rates of 4.8%, 7.2%, and 12.7% for the same years [5][10]. Product and Channel Analysis - For 2024, high-end and mid-range products generated revenues of 4.76 billion RMB and 260 million RMB, respectively, with year-on-year growth of 2% and 29%. In Q1 2025, high-end product revenue increased by 7% while mid-range product revenue saw a significant decline of 34% [3]. - The company has initiated an O2O new retail business and is focusing on group purchasing capabilities, aiming for group purchasing to account for a double-digit percentage of total sales in certain cities by 2025 [3][4]. Market Position and Future Outlook - The company is undergoing significant changes in product offerings, national expansion, and internal organizational restructuring, which are expected to enhance its market position [4]. - The report suggests continuous monitoring of the company's reform outcomes as it adapts to market conditions and consumer demands [4].