1H2019's revenue decreased by 11.31% over the same period last year, while its net profit increased by 20.66% compared with the same period last year.

The company released the 2019 mid-term report: 1H2019 realized operating income of 2.113 billion yuan, down 11.31% from the same period last year; realized net profit of 72.62 million yuan, equivalent to 0.14 yuan of fully diluted EPS, an increase of 20.66% over the same period last year; and realized net profit of 63.48 million yuan, an increase of 282.18% over the same period last year, and the performance was basically in line with expectations.

In a single quarter, 2Q2019 realized operating income of 881 million yuan, down 22.16% from the same period last year; realized net profit of 30.4 million yuan, an increase of 28.16% over the same period last year; realized non-return net profit of 25.94 million yuan, while 2Q2018 deducted non-return net profit of-14.16 million yuan.

The comprehensive gross profit margin increased by 2.74 percentage points, and the expense rate increased by 1.69 percentage points during the period.

1H2019's comprehensive gross profit margin was 11.00%, up 2.74% from the same period last year, mainly due to the increase in the proportion of revenue from high-margin products and gold products.

The period expense rate of 1H2019 was 7.46%, an increase of 1.69% over the same period last year, of which the sales / management (including R & D) / financial expense rate was 5.96%, 1.26% and 0.24%, respectively, representing a change of 1.44 / 0.21% 0.03% over the same period last year.

The revenue of all major categories has declined at the same time, and strive to strengthen the brand image through products and marketing.

During the reporting period, the company faced intensified competition. In the first half of the year, the company had 16 clean stores, and the revenue of the main categories decreased compared with the same period last year. In the first half of the year, the company's gold / platinum / mosaic / silver products revenue decreased by 10.6% / 28.89% / 4.86% / 66.09% respectively compared with the same period last year. In order to improve the performance of the revenue side, the company continues to invest resources in the product side, research and development of a variety of theme products, facing different situations, fully meet the needs of consumers. At the same time to carry out offline as the core marketing activities, combined with festivals to promote new products, display quality services, to achieve the purpose of improving the brand image.

Downgrade earnings forecast and maintain "neutral" rating

The company's revenue side is flat, and the expense side is also under some pressure. Without considering Suzhou good House performance compensation for the time being, we downgrade our forecast for the company's fully diluted EPS for 19-21 to 0.19 / 0.21 / 0.24 yuan (previously 0.20 / 0.23 / 0.26 yuan), maintaining a "neutral" rating.

Risk Tips:

The market recognition of the new products fell short of expectations, and the sales of platinum products continued to fall short of expectations.