"Long-term pain is not as good as short-term pain; we must go with the flow," said Yao Liangsong, Chairman of Oppein Home Group (603833.SH), at the company's 2023 shareholder meeting on May 15th. The home decoration industry is downstream of the real estate sector. Last year, affected by the slowdown in consumer spending growth and the continuous adjustment of the real estate market, the industry also entered a phase of "involution" in its ecological transformation. The operation of single-product categories was not very optimistic, and there was also a "price war" situation in the industry. The company aims to cope by measures such as increasing the average customer spend.

The management revealed a revenue growth target of 5% to 10% for 2024.

Yao Liangsong stated that in April and May 2023, significant internal institutional reforms were made. Previously, there were separate divisions for cabinets, wardrobes, and complete home decoration, each responsible for a single product category. Now, the company is gradually transitioning to a management system divided by cities and regions, avoiding the past situation where different divisions in the same city had different interests to pursue, and in the future, it will no longer be possible to simply pursue the interests of single product categories.

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"At the beginning, there might be confusion. During the reform process, some teams and agents will have an adaptation period, which led to the performance growth in 2023 not meeting expectations," said Yao Liangsong. The intensification of involution in the industry is an objective reality that must be faced. If it cannot be changed, one can only go with the flow, and the aforementioned reforms are also to adapt to industry changes.

He revealed that the company is cooperating with relevant departments to properly handle the issue of some agents "absconding," and the number is not significant.

At the shareholder meeting, the company's Secretary, Ou Yingying, stated that in 2024, the company will strive to achieve a year-on-year increase in operating income of 5% to 10%. The home furnishing industry still faces the pressure of industry ecological changes and rational consumption, and industry competition will become increasingly fierce. The above targets are to clarify the company's operational and internal management control objectives, and do not represent the company's performance guidance or profit forecast for 2024, nor do they represent a performance commitment. The realization of the above targets is affected by many factors such as the macroeconomic environment, market conditions, industry development, and the efforts of the management team, and there is a certain degree of uncertainty. Investors are advised to pay attention to the risks.

Regarding Oppein Home Group's 5% to 10% growth target, executives from other custom home furnishing companies analyzed to First Financial Daily reporters that Oppein's growth forecast does not fully represent the industry situation. It is expected that some companies in the industry can achieve better growth, and the advantages of some leading enterprises in the industry will continue to expand, encroaching on the shares of other small and medium competitors.

Data shows that in 2023, Oppein Home Group achieved a revenue of 22.78 billion yuan, a year-on-year increase of 1.4%; net profit was 3.04 billion yuan, a year-on-year increase of 12.9%; net cash flow from operating activities was 4.88 billion yuan, a year-on-year increase of 102%; basic earnings per share were nearly 5 yuan, a year-on-year increase of 12.9%; and the weighted average return on net assets was 17.6%, an increase of 0.18 percentage points year-on-year.

The company's Investor Relations Officer stated that last year, the main business gross margin was 33.6%, an increase of 2.44 percentage points year-on-year. The reasons include significant improvements in supply chain management efficiency and further highlighting the advantages of scale procurement; the manufacturing system continuously improved production efficiency through organizational optimization, delivery and quality transformation, automation line upgrades, and R&D cost reduction. The net cash flow from operating activities was 4.88 billion yuan, an increase of about 2.5 billion yuan year-on-year, a 102% increase: compared to 2022, the level of economic activity in 2023 has somewhat recovered, with cash received from the sale of goods and the provision of services increasing by 1.5 billion yuan year-on-year. At the same time, as the company's cost reduction and efficiency improvement measures were effectively implemented, cash paid for the purchase of goods and the acceptance of services decreased by 900 million yuan year-on-year.

The officer stated that in 2023, both the company's gross margin and net profit showed a good growth trend. In 2024, the company has adopted a more flexible and competitive sales strategy, benefiting distributors and end consumers. It is preliminarily estimated that the profit margin will be slightly lower than in 2023, but the company will improve management efficiency, control costs, and reduce operational and management costs to offset the adverse effects brought by changes in the external environment and the implementation of the company's phased marketing strategies. According to the 2024 budget target, the growth rate of administrative expenses needs to be lower than the revenue growth rate.