Investment Rating - The investment rating for the company is "Buy" (maintained) [3][9] Core Views - The company's profit margin is under pressure, but there is an expectation for recovery in profitability in the second half of the year [3] - The company's brand matrix optimization provides clear positioning for future growth, demonstrating resilience despite industry pressures [4][6] Financial Performance Summary - For the first three quarters of 2025, the company achieved operating revenue of 7.008 billion yuan, a year-on-year decrease of 8.46% - The net profit attributable to the parent company was 682 million yuan, down 26.05% year-on-year, while the net profit after deducting non-recurring gains and losses was 720 million yuan, a decrease of 17.56% year-on-year [4] - In Q3 2025, the company reported operating revenue of 2.457 billion yuan, a year-on-year decline of 9.88%, but the net profit attributable to the parent company increased by 1.44% year-on-year to 362 million yuan [4] Business Segment Analysis - The main brand, Sophia, shows certain resilience with a revenue of 6.352 billion yuan in the first three quarters of 2025, down 7.81% year-on-year [6] - The Milan brand reported revenue of 300 million yuan, down 18.43% year-on-year, while the overall revenue from the integrated channel was 1.393 billion yuan, a decrease of 14.12% year-on-year [6] Profitability Metrics - The gross margin for the first three quarters of 2025 was 35.24%, a decrease of 0.55 percentage points year-on-year, while the net profit margin was 10.13%, down 2.54 percentage points year-on-year [4] - In Q3 2025, the gross margin improved to 36.83%, an increase of 0.97 percentage points year-on-year, and the net profit margin rose to 15.32%, up 1.54 percentage points year-on-year [4] Earnings Forecast and Valuation - The company is expected to achieve net profits attributable to the parent company of 1.03 billion yuan, 1.24 billion yuan, and 1.33 billion yuan for the years 2025, 2026, and 2027, respectively, corresponding to P/E ratios of 12, 10, and 9 [4][6]

Core Viewpoint - The company reported a revenue of 10.494 billion yuan in 2024, a year-on-year decrease of 10.0%, while net profit attributable to shareholders was 1.371 billion yuan, an increase of 8.7%, exceeding previous expectations due to a 260 million yuan investment gain from the sale of equity in an associate [1] Group 1: Financial Performance - In Q1 2025, the company achieved a revenue of 2.038 billion yuan, a year-on-year decrease of 3.5%, with a net profit of 12 million yuan, down 92.7% year-on-year [1] - The company's gross profit margin slightly decreased by 0.7 percentage points to 35.4% in 2024, attributed to changes in revenue structure and increased terminal discounts [3] - The company plans to distribute a total dividend of 963 million yuan, with a payout ratio of 70.25% [3] Group 2: Brand and Channel Performance - The main brand, Sophia, experienced a revenue decline of 10.5% to 9.448 billion yuan, while the Milan brand grew by 8.1% to 510 million yuan [2] - The company has 1,797 dealers for Sophia, 530 for Milan, 156 for Simi, and 264 for Huahai, with a total of 2,503 exclusive stores for Sophia [2] - The integrated channel revenue reached 2.216 billion yuan in 2024, an increase of 16.22% year-on-year, with 280 direct cooperation decoration companies covering 202 cities [2] Group 3: Profit Forecast and Valuation - The company has adjusted its revenue forecasts for 2025-2026 downwards, with expected net profits of 1.317 billion yuan and 1.408 billion yuan respectively, reflecting a decrease of 4.4% and 5.7% from previous estimates [4] - The target price for the company is set at 20.55 yuan, based on a 15 times PE ratio for 2025, down from a previous target of 25.74 yuan [4]