The company released semi-annual report 2023: 23H1 achieved revenue of 4.674 billion yuan, year-on-year + 6.95%; net profit of 280 million yuan, + 1.53%; deduction of non-return net profit of 258 million yuan, + 19.08%; single Q2 revenue of 2.302 billion yuan, year-on-year + 12.38%; net profit of 157 million yuan,-2.00%; deduction of non-return net profit of 144 million yuan, + 9.34%.

Gold OEM wholesale business volume and prices rose, printing and dyeing business against the trend is strong. From a business point of view, gold OEM wholesale: 23H1 revenue 2.563 billion yuan, year-on-year + 18.92%, of which gold jewelry sales 25.28 tons, year-on-year + 9.29%, the average sales price of 101.39 yuan / g, + 8.81%. In the context of the recovery of domestic gold jewelry consumption and rising gold prices, both volume and price have risen. According to the company's announcement, the second phase of its gold industrial park is attracting investment, which is expected to add new vitality to the gold business; printing and dyeing business: in the context of increased trade environment risks and export pressure, revenue reached 1.828 billion yuan, + 0.66% compared with the same period last year.

The profit margin improved from the previous month, and the expense rate declined steadily. On the profit side, 23H1 gross profit is 14.52%, year-on-year + 2.18pcts; net profit rate is 5.99%, year-on-year-0.32pcts-23Q2 gross profit margin is 17.07%, year-on-year + 2.38pcts; net profit rate is 6.80%, year-on-year-1.00pcts. The total profit of gold / printing and dyeing business was 0.63 and 227 million yuan, + 57.48% and + 1.78% compared with the same period last year, and the loss of fair value change was 66.9565 million yuan, mainly because the company signed gold lease agreements with a number of banks, and the fluctuation of market value on the liability side of gold price rise was included in the profit or loss of fair value changes. On the expense side, the rate of 23H1 sales / management / R & D expenses is 1.16%, 2.18%, 2.10%, year-on-year-0.02pct/-0.07pct/-0.08pct.

Gold jewelry consumption continues to be high driven by deferred love and marriage demand, and the printing and dyeing industry is under relative pressure. According to the China Gold Association, the national gold consumption of 23H1 is 554.88 tons, + 16.37% compared with the same period last year, of which gold jewelry is 368.26 tons, + 14.82% compared with the same period last year. Offline traffic has recovered since the beginning of the year, with the fastest growth in retail sales, and the boom is expected to continue. Printing and dyeing companies pay close attention to domestic orders, maintain strong against the trend under export pressure, and continue to expand market share by relying on efficiency and brand advantages.

Investment advice. As an established enterprise of fabric printing and dyeing, the company has a sound main business and a leading profit level. Under the background of pattern optimization, printing and dyeing output may increase steadily. Since the beginning of the year, the recovery of gold jewelry consumption has exceeded expectations, the company's gold jewelry processing volume of the top three, short-term or undertake the release of backlog demand, medium-term or continue to benefit from category structural growth. It is estimated that the net profit of 2023-25 is 8.0,9.7 and 1.09 billion yuan, and the corresponding share price PE is 11,9 and 8 times, maintaining the "buy" rating.

The risk indicates that the growth of gold jewelry consumption is not as expected, the price of raw materials fluctuates, and the competition in the industry intensifies.