Core Viewpoint - The home furnishing industry in China is closely linked to the real estate cycle, with significant growth in the past two decades driven by real estate benefits. However, since 2021, new home transactions have been declining, leading to a gradual depletion of industry growth. Despite this, Kuka Home (603816) reported double-digit growth in both revenue and profit for the first half of 2025 [1]. Retail Transformation - Kuka Home achieved significant results from its ongoing retail transformation, with a 10.02% year-on-year increase in revenue to 9.801 billion yuan and a 1% increase in net profit to 1.021 billion yuan in the first half of 2025 [1]. - The retail transformation has led to remarkable performance in strategic categories, with smart product retail increasing by 18 times compared to the second half of 2024, and functional product retail growing over 50% [1]. - Kuka Home's seven-year retail transformation focuses on decoupling information flow, capital flow, and logistics, supported by standardized systems and data to enhance direct connections with consumers [1]. - The company has developed five digital systems to upgrade transaction processes into experiential ones, marking a transition from trial phases to systematic growth, which serves as a competitive advantage for future stability [1]. Whole Home Breakthrough - Kuka Home has evolved from a sofa manufacturer to a comprehensive home retail operator, emphasizing a clear path from single products to integrated home solutions [1]. - The company began its custom home business in 2015, gradually building capabilities in scenario design and space integration, which have been further enhanced since the launch of its "integrated whole home" strategy in early 2023 [1]. - In the first half of 2025, custom retail orders grew by 13%, and the number of integrated home stores reached 377, with a 10% increase in sales per unit area [2]. Global Expansion - Kuka Home is advancing its international strategy through a multi-faceted approach that includes capacity expansion, localized operations, and brand development [2]. - Over the past six years, the company has established overseas manufacturing bases exceeding 650,000 square meters in countries like Vietnam, Mexico, and the United States, with significant efficiency improvements in its Vietnamese facilities [2]. - Kuka Home is enhancing its global strategy by focusing on both B2B and B2C users, utilizing OEM and ODM business models while also developing its own brand, KUKA HOME, to explore new paradigms for Chinese home brands abroad [2]. - In the first half of 2025, KUKA HOME opened 15 new stores, bringing the total to 43, with coverage in countries such as India, Vietnam, Thailand, Uzbekistan, and Kazakhstan [2].

Core Viewpoint - The home furnishing industry in China is experiencing a cyclical transformation, with companies like Kuka Home achieving significant revenue and profit growth despite industry challenges [1][2]. Group 1: Financial Performance - Kuka Home reported a revenue of 9.801 billion yuan in the first half of 2025, representing a year-on-year growth of 10.02% [1] - The net profit attributable to shareholders reached 1.021 billion yuan, marking a year-on-year increase of 13.89% [1] - The net cash flow from operating activities surged to 1.094 billion yuan, reflecting a substantial year-on-year growth of 71.89% [1] Group 2: Retail Transformation - Kuka Home's retail transformation has yielded significant results, with smart product sales increasing by 18 times compared to the second half of 2024 [2] - The sales of functional products grew by over 50%, while the "No. 1 Mattress Series" also saw a retail growth exceeding 50% [2] - Custom retail orders increased by 13%, indicating a successful shift towards a user-demand-driven sales decision chain [2] Group 3: Business Evolution - Kuka Home has evolved from a sofa manufacturer to a comprehensive home furnishing retailer, focusing on integrated home solutions [3] - The company upgraded its full-house customization to an integrated whole-house strategy, enhancing its ability to meet consumer demands for quality home living [3] - As of the first half of 2025, the number of integrated home stores reached 377, with a 10% increase in sales per unit area [3] Group 4: Global Expansion - Kuka Home has established overseas manufacturing bases exceeding 650,000 square meters in countries like Vietnam, Mexico, and the USA [5] - The company is enhancing its global competitiveness through OEM and ODM partnerships while also developing its own brand, KUKA HOME, to explore new market opportunities [5] - In the first half of 2025, KUKA HOME opened 15 new stores, bringing the total to 43 across various countries, thereby expanding its global market presence [5]