Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, with a revenue of 4.551 billion yuan, down 7.68% year-on-year, and a net profit of 319 million yuan, down 43.43% year-on-year, which aligns with expectations [1] Financial Performance - In 1H25, the company achieved a revenue of 4.551 billion yuan, with a quarterly breakdown of 2.038 billion yuan in Q1 and 2.513 billion yuan in Q2, reflecting year-on-year declines of -3.46% and -10.84% respectively [1] - The net profit for 1H25 was 319 million yuan, with Q1 and Q2 net profits of 12 million yuan and 307 million yuan, showing year-on-year declines of -92.69% and -23.01% respectively [1] Product and Channel Analysis - Revenue from wardrobe products and distribution channels saw a slight increase in gross margin, with wardrobe and related products generating 3.575 billion yuan, down 8.54%, while the gross margin increased by 0.88 percentage points to 38.24% [2] - The company’s revenue from different channels showed a mixed performance, with distribution revenue at 3.539 billion yuan, down 9.57%, and direct sales revenue at 203 million yuan, up 27.59% [2] - The average transaction price for the Milan factory increased by 21% to 17,000 yuan per order, while the Sofia brand saw a decrease of 6% to 22,000 yuan per order [2] Margin and Cost Analysis - The gross margin for 1H25 was 34.38%, a decrease of 1.38 percentage points year-on-year, while the net profit margin was impacted by fair value changes, resulting in a net profit margin of 7.02%, down 4.44 percentage points year-on-year [3] - The company’s expense ratio for 1H25 was 21.23%, an increase of 0.38 percentage points year-on-year, with specific expenses showing varied trends [3] Future Outlook - For the second half of 2025, the company plans to leverage its multi-brand matrix and omnichannel layout to drive performance growth, focusing on a comprehensive product line and integration with smart home ecosystems [3] - The company aims to deepen its market penetration through the "1+N+X" strategy and has been recognized as an advanced intelligent factory, supporting its expansion efforts [3] Earnings Forecast and Valuation - Due to weak market demand recovery, the company has revised its earnings forecasts for 2025 and 2026 down by 17% and 11% to 1.218 billion yuan and 1.396 billion yuan respectively [4] - The current stock price corresponds to a price-to-earnings ratio of 11 and 9 for 2025 and 2026, with a target price adjustment of 10% down to 19 yuan, indicating a potential upside of 39% from the current price [4]