Core Viewpoint - The company reported a decline in both revenue and net profit for FY2025, with a focus on the challenges faced in domestic sales and a slight slowdown in international sales [1][2]. Revenue Summary - For FY2025, the company achieved a main revenue of 16.903 billion HKD and a net profit of 2.063 billion HKD, representing a year-on-year decrease of 8% and 10% respectively [1]. - In FY2025H2, the revenue was 8.597 billion HKD and net profit was 0.924 billion HKD, showing a decline of 9% and 21% year-on-year [1]. - Domestic sales faced pressure with a 17% decline in furniture sales, while online and offline sales decreased by 18% and 11% respectively [1]. - International sales showed a slight increase of 4%, with North America and Europe growing by 1% and 11% respectively [1]. Profitability Summary - The company experienced improvements in gross margin and operating profit margin due to raw material price reductions and cost control measures [2]. - The gross margin and net profit margin for FY2025 increased by 1.1 and decreased by 0.3 percentage points respectively [2]. - The average unit costs for various materials decreased, with leather and chemicals seeing reductions of 6.7% and 9.8% respectively [2]. - Advertising and management expenses decreased by 30% and 22% respectively, while tariff expenses dropped significantly by 89% due to increased shipments from Vietnam [2]. Future Outlook - Domestic sales are expected to face ongoing pressure from the real estate and consumer environment, but there are marginal benefits from national subsidies for home furnishings [3]. - The company plans to restructure its dealer and store layout to enhance operational efficiency and improve brand presence through new online channels [3]. - For international sales, if the current low tariff levels in the U.S. persist, the impact may remain manageable, with advantages in overseas production capacity becoming more evident [3]. - The company maintains a dividend payout ratio of 51%, with projected net profits for FY2026 to FY2028 expected to be 2.4 billion, 2.59 billion, and 2.85 billion HKD respectively, corresponding to PE ratios of 6.9, 6.3, and 5.8 times [3].

Investment Rating - The investment rating for the company is "Buy" and is maintained [8]. Core Insights - The company reported FY2025A results (April 2024 to March 2025) with main revenue and net profit attributable to shareholders at HKD 16.903 billion and HKD 2.063 billion, respectively, reflecting a year-on-year decline of 8% and 10% [2][5]. - In FY2025H2, the company experienced a revenue of HKD 8.597 billion and a net profit of HKD 0.924 billion, down 9% and 21% year-on-year [2][5]. - The revenue decline was primarily due to pressure on domestic sales, while external sales showed a slight slowdown [6]. - The company is focusing on internal transformation to enhance competitiveness through channel and marketing changes, with a strong emphasis on its long-term core competitive advantages despite short-term tariff disturbances in external sales [2][6]. Revenue Summary - Domestic sales faced significant pressure, with furniture sales in H2 down 17% (16% in RMB terms), and online and offline sales decreasing by 18% and 11%, respectively [6]. - The company reduced its brand specialty stores by 149 to 7,367 in H2, although there was a net increase of 131 stores for the full year [6]. - External sales grew by 4% in H2, with North America and Europe showing increases of 1% and 11%, respectively [6]. Profitability Analysis - The gross margin and operating profit margin improved in FY2025 due to raw material price reductions and cost control measures [6]. - The gross margin and net profit margin increased by 1.1 and -0.3 percentage points year-on-year, respectively [6]. - The average unit costs for various materials decreased, with significant reductions in advertising and management expenses by 30% and 22%, respectively [6]. Future Outlook - The company anticipates continued pressure from the real estate and consumer environment but expects marginal benefits from national subsidies for home furnishings [6]. - Plans include restructuring dealer and store layouts, enhancing online presence, and optimizing product series positioning to improve competitiveness [6]. - The company aims to maintain a dividend payout ratio of 51%, corresponding to a current dividend yield of 6.4% [6]. Earnings Forecast - Projected net profits for FY2026 to FY2028 are HKD 2.398 billion, HKD 2.590 billion, and HKD 2.849 billion, respectively, with corresponding PE ratios of 6.9, 6.3, and 5.8 [10].