Investment Rating - The investment rating for the company is "Buy" [6] Core Views - The company reported a slight decline in revenue and a significant drop in net profit due to challenges in the home furnishing sector, with total revenue of 315.32 billion yuan, down 1.16% year-on-year, and net profit attributable to shareholders of 841 million yuan, down 29.87% [1] - The supply chain operations remained stable, contributing 267.84 billion yuan in revenue, a year-on-year increase of 1.62%, and a net profit of 1.42 billion yuan, roughly unchanged from the previous year [1] - The real estate segment saw a revenue drop of 13.83% to 44.14 billion yuan, with a minimal net profit of 11 million yuan [1] - The rental and operation business of Meikailong generated over 200 million yuan in operating profit, but the fair value of investment properties decreased by over 2 billion yuan due to lower-than-expected rental growth, leading to a net loss of 2 billion yuan for Meikailong [1][2] Summary by Sections Financial Performance - In the first half of 2025, the company generated a net cash flow from operating activities of 17.9 billion yuan, an improvement compared to 22.1 billion yuan in the first half of 2024 [2] - The company maintained a robust cash position, allowing for a dividend of 0.7 yuan per share in 2025, indicating a high safety margin [2] Real Estate Sector - The real estate segment's profit contribution fell from 155 million yuan in the first half of 2024 to 11 million yuan in the first half of 2025, with significant improvements noted in the fundamentals of the Lianfa Group [3] - Total contract sales amounted to 13.41 billion yuan, a year-on-year increase of 29.19%, with equity sales reaching 8.96 billion yuan, up 56.27% [3] - The land reserve structure improved significantly, with over 79% of the land value in first- and second-tier cities, an increase of 13.61 percentage points from the end of 2024 [3][4] Profit Forecast and Valuation - The company is expected to maintain its ability to pay a dividend of 0.7 yuan per share in 2025, with a stock price target of 10-11 yuan, corresponding to a safety margin of 6-7% [5] - The marginal improvements in the real estate chain of Lianfa Group in sales and land reserves are expected to support future earnings recovery [5]