In the third quarter, the home industry was affected by the slower-than-expected recovery of downstream demand, with short-term performance pressure. However, leading companies are expected to maintain market share with a full product layout and multi-brand matrix, and performance is expected to grow steadily after downstream recovery.
Zhithon Finance and Economics APP learned that gtja released a research report stating that under the weak real estate background, operational pressure still exists, and short-term marginal catalysis lies in the replacement of old with new. Soft furnishings category benefits from overseas recovery and replacement-driven growth, with overall performance relatively favorable; leading custom companies actively broaden product categories, optimize customer structure, and drive channel transformation. In the third quarter, the home industry was affected by the slower-than-expected recovery of downstream demand, with short-term performance pressure. However, leading companies are expected to maintain market share with a full product layout and multi-brand matrix, and performance is expected to grow steadily after downstream recovery.
GTJA's main opinions include:
Policy effectiveness is gradually being realized, leading to a narrowing of the decline in sales.
In the first nine months of 2024, the completion area of housing decreased by 24.40% year-on-year, and the completion area of residences decreased by 23.90% year-on-year. In September alone, the completion area of housing decreased by 31.26% year-on-year, and the completion area of residences decreased by 30.09% year-on-year. From January to September 2024, the sales area of commercial housing decreased by 17.10% year-on-year, and the sales area of residences decreased by 19.20% year-on-year. In September alone, the sales area of commercial housing decreased by 10.82% year-on-year, a decrease of 2.95 percentage points compared to June, and the sales area of residences decreased by 10.97% year-on-year, a decrease of 3.30 percentage points from June, showing a significant narrowing of the decline in sales. Since the Political Bureau meeting in September, local regulatory policies have accelerated relaxation. From September 26 to October 16, a total of 70 cities announced 81 relaxations in policies, with Guangzhou and Tianjin completely lifting purchase restrictions, Beijing, Shanghai, and Shenzhen optimizing purchase restrictions by zone, Xiamen and Shenzhen lifting sales restrictions, and Shenzhen, Wuxi, Hangzhou canceling price limits for new homes.
The structure of major clients is gradually diversifying, and various companies are actively seeking change in their channel ends.
In the third quarter of 2024, there was differentiated year-on-year revenue performance in major business sectors of various companies, with companies optimizing customer structures by expanding into hospitals, hotels, schools, and other non-real estate businesses. Facing changes in terminal traffic, channel strategies among companies have diversified. In terms of store expansion strategies, Suofeiya, guangzhou holike creative home, and Nanjing OLO Home Furnishing are generally cautious, maintaining a stable or slightly streamlined number of stores, while OPPEIN Home Group Inc., Xilinmen Furniture, Gold Medal Home, and Zbom Home Collection are relatively proactive in store expansion. At the same time, with the trend of diversified terminal customer flows, custom companies urgently need to provide consumers with overall spatial solutions to achieve customer conversion. The trend of one-stop large home solutions is gradually emerging, and the extension of enterprise product categories is showing significant results.
Customization is affected by downstream demand, performance is under pressure, while soft products benefit from exports and replacement performance.
Customized home furnishings are directly affected by real estate sales, overall under pressure in 2024Q3. Companies are increasing the integration of categories to expand the entire chain of home layout, actively promoting the construction of new media channels for e-commerce. However, as the industry has shifted from natural customer acquisition to actively securing traffic, customization companies have increased marketing expenses, but the conversion of orders has shown relatively weak performance, leading to profit pressure.
The performance of soft product categories is relatively better than customized home furnishings. In terms of domestic sales, it is mainly driven by natural renewal and policies promoting consumption stimulation. Overseas sales benefit from the recovery of overseas demand and the expansion of cross-border e-commerce platforms. Looking ahead, the outlook for subsequent prosperity is expected to improve. From a cash flow perspective, the overall operation of the real estate industry in 2024Q3 is weak, impacting the revenue scale of home furnishing companies. Meanwhile, materials procurement, taxes, project performance guarantees, and payable expenses still need to be paid, leading to a year-on-year decline in cash flow for each company.
As for recommendations: jason furniture (603816.SH), oppein home group inc. (603833.SH), suofeiya home collection (002572.SZ), man wah hldgs (01999), zbom home collection (603801.SH), xilinmen furniture (001323.SZ), xilinmen furniture (603008.SH).
Risk warning: Slow recovery in downstream demand and significant fluctuations in raw material prices.
