The Zhitong Finance App learned that Guolian Securities released a research report saying that demand for renovation is skewed from new homes to existing homes, and the right to talk about traffic is gradually shifting, and different companies are entering the field of assembly across borders. It is expected that the competitive landscape of assembly will change greatly in the future, and the leading effect will become more obvious. Home furnishing companies need to reduce customer acquisition costs, improve efficiency, and continuously expand the scale of the assembly business through decoration alliances, cooperation with local home improvement dealers, and digital empowerment. Assembly challenges the ability of home furnishing companies to integrate the industrial chain, so it is recommended to focus on traditional home furnishing leaders with strong comprehensive alpha advantages under industry trends, Oppa Home (603833.SH), Sophia (002572.SZ), Gujia Home (603816.SH), Zhibang Home (603801.SH), and Minhua Holdings (01999).

The views of Guolian Securities are as follows:

The entrance to home improvement traffic has changed, and the whole thing has become the next outlet

The structure of China's decoration market is dominated by new homes and existing homes. Since 2019, demand for new homes has declined, leading to a decline in residential land transactions, which has spread to the front end, and the number of newly opened projects has also shown a downward trend. Demand for home improvement is gradually shifting from ToC to the ToC channel, and future housing stock will become the main home improvement market. In this context, the home improvement industry broke through 3 trillion dollars for the first time in '22, and the growth rate is expected to slow down. Therefore, companies in the home improvement sector are trying to increase customer unit prices and expand revenue volume through horizontal and vertical expansion of the industrial chain, and refurbishment has become the next outlet in the field of home decoration after all-inclusive and whole-house customization. In recent years, the market size and penetration rate have continued to increase.

Different companies have entered the market across borders, and the overall layout is in turmoil

Complete circuit companies have their own advantages: 1) integrating customer acquisition and service, with traffic entry and integration advantages; 2) second-hand housing purchase and rental platforms enter the home improvement circuit through mergers and acquisitions to meet the trend of home improvement demand leaning towards stock housing; 3) Home furnishing stores rely on natural customer flow advantages to connect upstream home improvement and downstream furniture and appliance companies to carry out home improvement business; 4) Internet home improvement brands are excellent in marketing customer acquisition and monetization and full-link data linkage; 5) Brand traffic and product advantages are the core competitiveness of customized home furnishing. Different enterprises enter the assembly field across borders, and it is expected that the competitive landscape will change greatly with traffic migration.

The home seeks a way to survive in the midst of changes

According to research by iResearch, consumers pay attention to familiar personalities and offline experiences, and pay the most attention to after-sales service attitude and quality. This is consistent with the current dilemma of home improvement, that is, customer acquisition is fixed and the cost is high, and at the same time, the construction supervision system is inadequate. In order to seek breakthroughs, under the trend of diversification and fragmentation of channels, home furnishing brands accelerate the development of assembly channels for assembly dealers, and at the same time actively form assembly alliances to intercept traffic from multiple angles, and empower the full digital link through tools such as BIM, cloud services, and big data to achieve the goals of reducing costs and increasing construction supervision capabilities and efficiency.

Risk warning: the risk that consumer spending will fall short of expectations due to a slowdown in macroeconomic growth; the risk that real estate sales and completion data fall short of expectations; the risk of a sharp rise in raw material prices.