Suofeiya Home Collection's 2025 results missed expectations, and a high dividend payout is not enough to offset growth pressure

Overview

This report is Goldman Sachs' review of Suofeiya Home Collection's 2025 results. The company's 2025 revenue and net profit both came in below expectations, and the YoY declines in 4Q25 revenue and net profit widened further. Although the company raised its payout ratio to 85%, the analysts believe weakness in the property market will continue to suppress furniture demand over the next 1-2 quarters, and therefore maintain a Neutral rating.

Core views

The core view is that risk-reward is broadly balanced. Suofeiya Home Collection has advantages in channel network and manufacturing capabilities and could become one of the consolidators in China's customized furniture market over the long term; however, in the short term, channel and product expansion has not yet translated into faster growth than industry leader peers, and demand for customized furniture remains highly dependent on the property cycle. The report believes investors should remain on the sidelines before signs of sustained demand recovery appear.

Analysis framework

The report analyzes revenue channels, product mix, gross margin, net margin, property-demand transmission, earnings forecast revisions, and valuation methodology, and combines this with the historical 6-9 month lag from property recovery to furniture demand to conclude that short-term growth pressure will persist.

Methodology notes

• Valuation methodsDiscounted Exit Multiple Method

  12X 2028E EPS discounted to 2027E

  Goldman Sachs applies a 12x exit P/E multiple to 2028E EPS and discounts it back to 2027E using a 9.8% cost of equity, arriving at a 12-month target price of Rmb11.4.

• Factor AnalysisGS Factor Profile

  Growth, Financial Returns, Multiple, and Integrated factors

  This framework compares a stock against the market and industry peers based on growth, financial returns, valuation multiples, and integrated factors.

• M&A ScoringM&A Rank

  M&A probability score

  The report discloses that Suofeiya Home Collection has an M&A Rank of 3, indicating a relatively low probability of becoming an acquisition target, which is usually not included in the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 002572.SZ

  Research subject

  Strengths

  Has channel network and manufacturing advantages, a relatively high payout ratio, and relatively better performance in cabinets and other businesses in 2H25.

  Weaknesses

  Retail and home decoration channels still posted double-digit YoY declines in 2H25, wardrobe and wooden door growth lagged, and net margin was dragged down by fair value losses on investments.

  Comparison

  The report points out that the company's channel and product expansion has not yet delivered faster revenue growth than industry leader Oppein.

  Risks

  Property demand recovery falls short of expectations, product and channel expansion underperforms expectations, competition intensifies, and changes in the share of project channels affect margins.

Key data

• 2025 revenueRmb9,367mnDown 10.7% YoY and 2% below Goldman Sachs expectations.
• 2025 attributable net profitRmb901mnDown 34.3% YoY and 10% below Goldman Sachs expectations.
• 4Q25 revenue/net profitRmb2,359mn / Rmb220mnDown 17% and 51% YoY, respectively.
• 2025 payout ratio85%Higher than 70% in 2024, implying about a 6% dividend yield.
• 2025 gross margin35.7%Up 0.3ppt YoY, driven by lower costs and higher efficiency.
• 2025 net margin9.6%Down 3.4ppt YoY, mainly due to fair value losses on investments.
• Target priceRmb11.4Reduced from the previous Rmb12.3.
• 2026E-2028E EPS revisionLowered by 9%-10%Reflecting the latest results and demand pressure.

Impact & implications

For investors, the higher dividend payout enhances the appeal of shareholder returns, but it is insufficient to offset valuation pressure caused by declining revenue, profit pressure, and weak demand along the property chain. The report implies that before improved existing-home transaction volumes in tier-one cities are genuinely transmitted to furniture demand, the share price lacks a clear upward catalyst.

Risks

• Property market performance exceeds or falls short of expectations, affecting demand for customized furniture.
• Progress in product and channel expansion exceeds or falls short of expectations.
• Industry competition intensity is higher or lower than expected.
• The share of project channels expands or contracts, potentially diluting or improving margins.
• There is a 6-9 month lag from property transaction recovery to furniture orders, so short-term earnings may remain under pressure.

What to watch

• Whether the revenue decline narrows over the next 1-2 quarters.
• Whether the rebound in existing-home transactions in tier-one cities can be transmitted to furniture demand 6-9 months later.
• Growth divergence among retail, home decoration, direct sales, and project channels.
• Gross margin trends for wardrobes, cabinets, wooden doors, and other businesses.
• Whether the company continues to maintain an 85% payout ratio and its sustainability.
• Whether the revenue growth gap versus industry leaders such as Oppein improves.