Core Insights - The company reported a significant decline in revenue and net profit for the first half of 2025, with revenue at 1.09 billion and a net profit of 106 million, representing a year-on-year decrease of 16.56% and 51.31% respectively [1] Financial Performance - The company's operating cash flow improved to 290 million, primarily due to reduced procurement expenses [1] - The number of franchise stores decreased from 987 to 928, with franchise channel revenue dropping to 186 million, a substantial decline of 43.34% year-on-year [1] - The same-store sales performance in the direct sales channel also faced challenges, with a year-on-year decline of 6.86%, bringing the average store efficiency to 578,900 [1] Inventory Management - As of the end of June, the company's inventory reached 764 million, with a decline in inventory turnover efficiency [1] - The turnover days for bedding and comforter inventory increased to 204 days and 203 days respectively, indicating a slowdown in inventory turnover among franchisees, which management identified as a core issue [1]

Investment Rating - The report maintains a "Buy" rating for the company [1]. Core Views - The company has shown stable performance over 2024, but faced pressure in Q1 2025, with a significant decline in revenue and net profit. The company remains a leader in the home textile industry, and its high dividend payout provides stable returns for investors [1][10]. - In 2024, the company achieved a revenue of 3.01 billion yuan, a year-on-year decrease of 0.6%, and a net profit of 540 million yuan, down 5.2% year-on-year. The first quarter of 2025 saw a more pronounced decline, with revenue dropping 17.8% and net profit falling 54.1% [5][6]. Summary by Sections Financial Performance - In 2024, the company’s revenue and net profit showed a slight decline, with revenue at 3.01 billion yuan and net profit at 540 million yuan. The first quarter of 2025 reported revenue of 540 million yuan and net profit of 56.14 million yuan, reflecting a significant year-on-year decline [5][6]. - The company’s gross margin improved to 56.1% in 2024, with a slight increase in various product categories [8][15]. Revenue Breakdown - In 2024, the revenue from different product categories was as follows: bedding sets (39.7%), comforters (39.8%), and pillows (7.2%), with respective year-on-year changes of -0.2%, -1.6%, and -2.8% [7]. - Revenue from various sales channels in 2024 showed a decline in e-commerce sales by 7.4%, while franchise and direct sales saw slight increases of 1.4% and 1.8%, respectively [7]. Dividend and Shareholder Returns - The company proposed a cash dividend of 0.62 yuan per share for 2024, resulting in a dividend payout ratio of 96%. The current dividend yield is 7.9% based on the stock price as of April 29, 2025 [5][10]. Future Earnings Forecast - The report projects net profits for 2025, 2026, and 2027 to be 548 million yuan, 574 million yuan, and 596 million yuan, respectively, with corresponding EPS of 0.65 yuan, 0.68 yuan, and 0.71 yuan [10][11].