Several companies in the Chinese A-share home decoration and home furniture industries have recently released their 2024 financial reports, predicting a negative net profit for the year. Profitable enterprises have also seen a decrease in net profit and a slowdown in growth.
As the end of January approaches, Chinese listed companies have been announcing their profit forecasts for 2024.
According to a report from “First Financial” on January 25th, the estimated annual reports of several A-share leading companies in the home decoration and home furniture sectors show that some companies have a negative net profit, leading to an expanded loss. Among the top ten listed companies in the A-share decoration and renovation industry, Guangtian Group, Zhongtian Decoration, and Baoying Corporation have all released their performance forecasts for 2024.
Guangtian Group’s performance forecast indicates a loss, with the estimated net profit attributable to shareholders of the listed company expected to range from 180 million to 260 million yuan, with a non-net profit loss of 178.5 million to 258.5 million yuan.
Zhongtian Decoration announced an expected net profit loss of 350 million to 450 million yuan for 2024, with a non-net profit loss of 340 million to 440 million yuan, significantly higher than the previous year’s figures. In the same period of the previous year, Zhongtian Decoration reported a net profit attributable to shareholders of 8.3353 million yuan and a non-net profit loss of 1.2 million yuan.
Baoying Corporation anticipates a net profit loss of 630 million to 830 million yuan for 2024.
Additionally, three of the top five companies in the custom home furniture industry have disclosed their performance forecasts for 2024.
The industry-leading Oppein Home stated that based on preliminary financial calculations, it is estimated that the net profit attributable to the parent company’s shareholders will be between 2.58 billion and 2.884 billion yuan in 2024, a decrease of 5% to 15% compared to the previous year. The non-net profit is projected to be between 2.334 billion and 2.608 billion yuan, also showing a decrease of 5% to 15%. The estimated operating income for 2024 is expected to be in the range of 18.226 billion to 20.504 billion yuan, a decrease of 10% to 20% compared to the previous year.
Another custom home giant, Sofia, announced that its non-net profit might decline year on year. The estimated net profit attributable to the shareholders of the listed company in 2024 is projected to reach 1.324 to 1.45 billion yuan, a 5% to 15% increase, but the net profit after deducting non-recurring gains and losses will drop to 1.021 to 1.135 billion yuan, a decrease of 0% to 10% compared to the previous year.
Regarding the anticipated decrease in operating forecasts, “First Financial” believes that the construction and decoration industry, as well as the customized home furniture industry, are closely related to the real estate sector. These upstream and downstream industry chains have faced challenges in the past few years due to the continued downturn in the real estate industry. Guangtian Group, in particular, has been affected due to its deep ties with Evergrande, which experienced a financial crisis.
Oppein Home stated that under the influence of various factors, the custom home furniture industry is deeply entrenched in a “cold winter,” facing the most severe challenges since its establishment 30 years ago. On the demand side, new home sales are under pressure, while the secondary housing market transactions have shown signs of recovery, but the short-term boost is insufficient. Overall demand for home products has shrunk, with significant pressure on traditional retail and project business channels. The market environment changes have had a significant impact on the custom home furniture industry, with a noticeable year-on-year decline in the company’s current operating income, adversely affecting the achievement of the profit target for the period.
Sofia, another custom home furniture giant, also believes that due to the impact of the real estate cycle and intensified market competition, the growth rate of custom furniture companies has slowed down, posing short-term challenges to the company’s operating environment.
Some industry experts believe that due to the slowdown in China’s macroeconomic situation and a decrease in people’s incomes, the real estate sector continues to struggle to rebound in the short term.