Core Viewpoint - The market holds a cautious attitude towards the fair value fluctuations of Meikailong and the losses of Lianfa Group in the real estate business, while expectations for Jianfa Co.'s future net profit growth are relatively low. However, Jianfa Co. maintains a stable operational foundation in its supply chain and real estate sectors, with positive changes occurring in the operations of Meikailong and Lianfa Group, which are expected to lead to a recovery in performance [1] Group 1: Meikailong's Operational Recovery - Meikailong, a leading home furnishing market player, shows signs of operational recovery with a new five-year plan aiming to increase rental rates to over 90% within three years. The new leadership and strategic direction indicate a potential turning point for Meikailong [1] - The business model of Meikailong, characterized by a rental income model, is expected to benefit from rising rents during economic upturns, enhancing net profit. Conversely, during downturns, fair value decreases may pressure net profit [1] - The fair value loss pressure for Meikailong is projected to gradually ease from 2025 to 2027, with potential profit growth starting in 2026 or 2027 under optimistic scenarios [1] Group 2: Real Estate Business Improvement - Jianfa Co.'s real estate business, comprising Jianfa Real Estate and Lianfa Group, is entering a new phase of quality improvement and efficiency. Lianfa Group is expected to experience significant operational improvements due to a management overhaul and a focus on new product lines targeting young consumers [2] - A total of approximately 15 billion yuan in inventory impairment has been recognized from 2021 to 2024, with Lianfa Group's impairments largely accounted for, indicating that many risks have been preemptively addressed [2] - The company anticipates that while profits may be under pressure in 2024-2025, the downward price pressure will gradually diminish thereafter [2] Group 3: Supply Chain Stability - Jianfa Co. has achieved a counter-cyclical growth in its supply chain operations, with an annual growth rate of approximately 15%. The diversified product structure has effectively mitigated the impact of single-category cyclical fluctuations [3] - The company has distributed a total of 19 billion yuan in dividends since its listing, representing 63% of its current market value, with a commitment to maintain a minimum dividend of 0.7 yuan per share for 2024-2025 [3] - The stable operating cash flow supports the dividend policy, with an average historical dividend yield of 4.3% [3] Group 4: Validation and Catalysts - Key indicators for validating Jianfa Co.'s operational recovery include monitoring Meikailong's rental rates and unit rents, as well as Lianfa Group's sales and land acquisition quality [4] - Catalysts for potential performance improvement include the successful implementation of Meikailong's new strategic initiatives, favorable real estate sales data, and a rebound in commodity prices [6] Group 5: Unique Insights - The market tends to view Lianfa Group and Meikailong pessimistically, but the analysis reveals significant operational changes and core value that have been overlooked. Meikailong is seen as a "misunderstood recovery asset" rather than a "bad asset" [7] - The supply chain business is transitioning to a service fee model, demonstrating strong profitability resilience, which is often underestimated by the market [8] - The market's focus on the overall downturn in the real estate sector overlooks the individual improvements within Lianfa Group, which is undergoing significant operational changes under new management and product lines [9] Group 6: Profit Forecast - Jianfa Co.'s real estate profits are expected to hit a low point in 2025, with Jianfa Real Estate maintaining stable growth while Lianfa Group faces significant impairment pressures. However, Lianfa Group's performance is anticipated to recover starting in 2026, contributing positively to Jianfa Co.'s profits [10] - The projected net profits for Jianfa Co. from 2025 to 2027 are 2.3 billion, 3.1 billion, and 4.6 billion yuan, respectively, with a CAGR exceeding 40% during this period [10] - The company is expected to experience a "deep squat and jump" in performance over the next three years, with a target price of 12.7 yuan per share based on a 12x PE valuation for 2026 [10]