Investment Rating - The investment rating for the company is "Buy" (maintained) [3][10] Core Views - The company is expected to experience a recovery in profitability in the second half of the year despite facing pressure on profits in the first half [3][7] - The company's overall revenue for the first half of 2025 was 4.55 billion yuan, a year-on-year decrease of 7.68%, with a net profit attributable to shareholders of 319 million yuan, down 43.43% year-on-year [7] - The company's strategic focus on home furnishing and brand optimization is anticipated to drive future growth [7] Financial Performance Summary - **Revenue and Profitability**: - 2023A revenue was 11.666 billion yuan, with a projected decline of 10% in 2024A, followed by a recovery to 10.809 billion yuan in 2025E [3] - The net profit attributable to shareholders for 2023A was 1.261 billion yuan, with a forecasted drop of 25% in 2025E [3] - **Earnings Per Share (EPS)**: - EPS for 2023A was 1.31 yuan, expected to decrease to 1.07 yuan in 2025E before recovering to 1.38 yuan in 2027E [3] - **Gross Margin**: - The overall gross margin for the first half of 2025 was 34.38%, down 1.38 percentage points year-on-year, primarily due to declines in cabinetry and door segments [7] - **Sales and Distribution**: - The company has 2,517 specialty stores and 1,794 dealers, indicating a slight increase in store count despite revenue pressures [7] Business Segment Analysis - **Main Brand (Sofia)**: - Revenue decreased by 7.09% to 4.128 billion yuan in the first half of 2025, with a factory average selling price of 22,340 yuan, down 5.7% year-on-year [7] - **Milanna**: - Revenue fell by 26.53% to 176 million yuan, but the average selling price increased by 21% [7] - **Other Brands**: - The company is focusing on transforming its business model, with a notable decrease in the number of dealers for some brands [7] Future Outlook - The company is expected to achieve net profits of 1.03 billion yuan in 2025, 1.24 billion yuan in 2026, and 1.33 billion yuan in 2027, corresponding to a price-to-earnings (P/E) ratio of 13, 11, and 10 respectively [3][7]