According to a recent announcement from Beijing Oriental Yuhong Waterproof Technology Co., Ltd. (Oriental Yuhong), known as the “waterproof Maotai,” the company is expected to incur losses in 2024, with a net profit decrease between 95.66% and 93.51% compared to the previous year.
Oriental Yuhong released its annual performance forecast on January 18, projecting a net profit attributable to shareholders of the listed company in 2024 to be between 98.6478 million yuan and 147 million yuan, a decline of 95.66% to 93.51% year-on-year. Net profit after deducting non-recurring gains and losses is estimated to be between 126.3539 million yuan and 175.1586 million yuan, showing a decrease of 93.14% to 90.48% compared to the same period last year.
The company explained the significant year-on-year decline in net profit by stating that it has intensified risk control over receivables, voluntarily abandoned poorly performing direct sales projects, leading to a decline in direct sales business revenue and consequently a decrease in operating income. Additionally, the company increased the transformation efforts of its channels, resulting in increased expenses in the short term. Furthermore, provision for impairment losses was made on receivables and other assets that may incur impairment losses.
Reportedly, Oriental Yuhong previously mentioned, “In general, the fourth quarter is the peak season for collection for the company.” However, the financial performance of Oriental Yuhong in the fourth quarter appeared to be poor, with data showing that the net profit attributable to shareholders of the listed company for the first three quarters of 2024 was 1.277 billion yuan, a year-on-year decrease of 45.73%.
From 2022 to 2024, Oriental Yuhong’s stock price has been continuously declining, with annual declines of 36.82%, 44.22%, and 27.89% respectively. The stock price dropped from a high of 62.54 yuan per share to around 12 yuan per share.
Not only Oriental Yuhong, but other companies in the decoration and construction material category also experienced poor performance in 2024, as the industry struggles to recover from the downturn in the real estate market.
Zhejiang Youbang Integrated Ceiling Co., Ltd. forecasted a net loss of 90 million to 130 million yuan for 2024, compared to a profit of 63.6983 million yuan in 2023. Youbang Ceiling attributed the decline in net profit to a reduction in sales scale and a decrease in operating income.
Guangdong Dinggu Creative Home Co., Ltd. predicted a loss of 130 million to 180 million yuan in 2024, while it recorded a profit of 1985.33 million yuan in 2023. The main business of this company, Jianlang Hardware, expects a year-on-year decline in net profit attributable to shareholders of the listed company ranging from 62.96% to 72.22%, between 90 million yuan and 1.2 billion yuan in 2024.
Furthermore, several leading A-share companies in the home decoration and customization industries have also forecasted losses for 2024.
Among the top ten listed companies in the A-share decoration and construction industry, Guangtian Group, Zhongtian Precious Decoration, and Baoying Corporation all anticipate losses in 2024. Guangtian Group expects a net loss of 180 million to 260 million yuan. Zhongtian Precious Decoration announced an expected net loss of 3.5 billion to 4.5 billion yuan for 2024. Baoying Corporation is forecasting a net loss of 630 million to 830 million yuan in 2024.
In the top five listed companies in the customized home industry, Oppein Home and Sofia anticipate losses in 2024. Oppein Home, the industry’s top company by market value, expects to achieve a net profit attributable to the parent company’s shareholders in the range of 2.58 billion yuan to 2.884 billion yuan for 2024, a decrease of 5% to 15% year-on-year. Sofia stated that its non-GAAP net profit may decline to 1.021 billion to 1.135 billion yuan, representing a decline of 0% to 10% compared to the same period last year.
According to First Financial, the construction, decoration, and home customization industries are closely linked to real estate and have been adversely affected by the prolonged downturn in the real estate sector over the past few years.
Data released by the China Index Research Institute at the beginning of this month indicated that in 2024, the sales revenue of China’s top 100 real estate companies decreased by 30.6% compared to the previous year.
Statistics from the National Bureau of Statistics of China showed that in 2024, national real estate development investment decreased by 10.6% year-on-year, new commercial housing sales area dropped by 12.9% year-on-year, and real estate development enterprises’ funds fell by 17% compared to the previous year.
In the Chinese stock market, “Maotai in the stock market” refers to the leading position of certain industries or companies, usually used to describe companies that perform exceptionally well in their respective sectors. These companies are called “Maotai” because they hold a significant leadership position and market influence in their fields.
The concept of “Maotai” originates from Guizhou Maotai, which is named after its leading position in the Chinese liquor industry. Subsequently, this concept has been expanded to other industries to refer to leading enterprises in various sectors.