Core Viewpoint - The company's performance in 1H25 fell short of expectations, primarily due to external environmental pressures affecting revenue [1] Revenue Performance - 1H25 revenue was 2.8 billion yuan, down 9.7% year-on-year; net profit attributable to shareholders was 272 million yuan, down 9.2% year-on-year [1] - In 2Q25, revenue was 1.54 billion yuan, down 10.4% year-on-year; net profit attributable to shareholders was 166 million yuan, down 5.6% year-on-year [1] - The decline in revenue was influenced by the real estate market and a shortage of national subsidy funds starting in June [2] Product and Channel Analysis - Major revenue sources in 1H25 included range hoods, gas stoves, and water heaters, which collectively generated 2.423 billion yuan, accounting for 87% of total revenue [2] - Offline channel revenue decreased by 6% to 1.488 billion yuan, while overseas channel revenue fell by 8% to 347 million yuan [2] - The company has been focusing on deepening its presence in lower-tier markets, with new retail channel revenue growing from 608 million yuan in 2022 to 1.251 billion yuan in 2024, achieving a CAGR of 43% [2] Strategic Initiatives - The company is implementing a high-end strategy, which has led to a 2.9 percentage point increase in gross margin to 43.5% in 1H25 [3] - The gross margin for 2Q25 reached 44.7%, marking a new high since 2021 [3] - The company has opened over 1,000 new stores across various platforms, including 100 large stores in 1H25 [2] Profitability Forecast - Due to real estate pressures and diminishing effects of national subsidies, the company has revised its net profit forecasts for 2025 and 2026 down by 5.3% and 7.0% to 486 million yuan and 521 million yuan, respectively [4] - The current stock price corresponds to a P/E ratio of 11.3x for 2025 and 10.6x for 2026, with an expected upside of 25.4% based on a target price of 8.15 yuan [4]