Group 1: Retail Channel Development - The company focuses on refining retail channel operations, emphasizing the "store efficiency doubling project" to empower distributors and enhance retail revenue [1] - The project has shown significant improvements in store efficiency, with plans to expand from pilot stores to a broader range of outlets [1] Group 2: Operational Strategy - The company aims to drive overall channel growth through retail channel expansion while systematically exploring growth paths in engineering, home decoration, and e-commerce [1] - A dual approach of product and marketing strategies is being implemented to enhance product strength and optimize sales structure, which is expected to improve gross margins [1] Group 3: International Market Expansion - The company is actively pursuing international strategies, establishing partnerships with local distributors and expanding its store presence overseas [2] - Online sales are being boosted through overseas e-commerce platforms, although the contribution of international business to overall revenue remains low [2] Group 4: Impact of National Subsidy Policies - The company is leveraging national subsidy policies to optimize sales structure, which has positively impacted gross margins [2] - The clarity of subsidy policies influences operational strategies, but the ongoing refinement of management practices is deemed more critical [2]

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [1] Core Views - The report highlights that the optimization of retail channels is showing positive effects, and there is an expectation for profit recovery [1] - The company is actively adjusting its strategies in response to industry demand pressures and increasing competition, focusing on retail channel expansion and product enhancement [7] Financial Performance Summary - In the first half of 2025, the company achieved revenue of 2.837 billion yuan, a year-on-year decrease of 8.12%, and a net profit attributable to shareholders of 28.28 million yuan, down 25.15% year-on-year [7] - The gross profit margin improved to 29.47%, an increase of 2.44 percentage points year-on-year, attributed to optimized channel structure and strengthened cost control [7] - The company’s net cash flow from operating activities was -519 million yuan, showing improvement compared to -590 million yuan in the same period last year [7] Earnings Forecast and Valuation - The forecast for net profit attributable to shareholders for 2025-2027 has been adjusted to 247 million, 308 million, and 363 million yuan respectively, with corresponding P/E ratios of 36X, 29X, and 25X [7] - The report emphasizes the company's strong brand, product, and channel capabilities, positioning it well for future growth despite current challenges [7]