Investment Rating - The investment rating for the company is "Buy" and is maintained [6] Core Views - The company reported a revenue of 1.09 billion yuan for H1 2025, a year-on-year decrease of 16.6%, and a net profit attributable to shareholders of 110 million yuan, down 51.3% year-on-year. In Q2 alone, revenue was 560 million yuan, a decline of 15.3%, with a net profit of 50 million yuan, down 47.7% year-on-year [2][4] Summary by Sections Financial Performance - For H1 2025, the company achieved a revenue of 1.09 billion yuan, a decrease of 16.6% year-on-year, and a net profit of 110 million yuan, down 51.3% year-on-year. Q2 revenue was 560 million yuan, a decline of 15.3%, with a net profit of 50 million yuan, down 47.7% year-on-year [2][4] Market Dynamics - The company faces pressure across all channels, with revenue from direct sales, franchise, group purchases, and e-commerce channels declining by 9%, 43%, 14%, and 5% year-on-year, respectively. The decline in franchise revenue is attributed to a significant decrease in distributor inventory shipments [10] Profitability and Cash Flow - The gross profit margins for direct sales, franchise, and e-commerce channels changed by -1.7 percentage points, -3.9 percentage points, and +2.9 percentage points, respectively. The increase in sales expense ratio by 7.3 percentage points to 36.1% is due to higher platform fees and promotional adjustments, leading to a net profit margin decrease of 6.9 percentage points to 9.7% [10] Inventory and Cash Flow Management - Inventory turnover days increased by 39 days to 271 days, and accounts receivable turnover days increased by 24 days to 68 days. However, operating cash flow improved significantly, with a net cash flow of 290 million yuan, up 211% year-on-year, mainly due to reduced cash payments for goods and services [10] Future Outlook - The company is expected to maintain strong competitiveness in the home textile industry, with projected net profits for 2025-2027 at 380 million yuan, 430 million yuan, and 480 million yuan, respectively. The current price corresponds to a PE ratio of 16, 14, and 13 times for the respective years. The company is also expected to continue its high dividend policy, with a projected payout ratio of 96% for 2024 [10]