Main points of investment

Performance overview: income slightly reduced profit pressure, outdoor path business repair obvious H1: income 590 million yuan (- 4%), return mother net profit 43.22 million yuan (- 8%), deduction non-return mother 36.39 million yuan (+ 5%); Q2: income 340 million yuan (- 1%), return mother net profit 28.76 million yuan (- 14%), deduct non-return mother 24.44 million yuan (+ 2%). The decline on the profit side is greater than that on the revenue side, mainly due to the increase in sales expenses and the reduction of government subsidies.

Split by business: 1) Indoor equipment: revenue of 381 million yuan,-4.5% of the same period last year. 2) Outdoor path: revenue of 97 million yuan, + 17.3% compared with the same period last year. 3) display shelf: the income is 101 million yuan, + 19.4% compared with the same period last year.

Profitability: gross profit margin slightly upward, net profit pressure due to the increase in sales rate H1 gross profit margin is 30.0% (+ 0.9pp), net profit rate is 7.3% (- 0.3pp), sales / management / R & D rate is 10.7% (+ 1.8pp) / 7.6% (- 0.7pp) / 2.3% (- 0.4pp).

With further breakdown of sales expenses, 23H1's business hospitality expenses and travel expenses increased significantly, while advertising expenses and business publicity expenses decreased; we judge that the increase in sales rates is mainly due to the increase in the frequency of the company's offline participation and bidding, and the actual cost control in the dimensions of advertising marketing and operation management is relatively stable, while the effectiveness of market expansion and business reserves is expected to be released in the future.

The incentive landing shows confidence, and H2 performance has strong certainty.

Number of restricted shares: 1.4 million restricted shares, accounting for about 0.34% of the total share capital awarded to: director and vice president Huang Shixiong (251000 shares), vice president Li Xiaofeng (251000 shares), vice president Zhang Rushou (215000 shares), director and vice president Wu Duanxin (135000 shares), director, financial director and secretary of the board of directors Fu Jianmu (135000 shares) and 4 core business (technical) backbones.

Incentive amortization: total 8.06 million yuan, amortization for 23-25 years 151 million.

Performance goal: divided into two attribution periods, the 24-year return net profit (excluding incentive cost) of 23 racket is required to be based on the previous year's return net profit, with a growth limit of 14% and an upper limit of 20%.

That is, the lower limit of the 24-year return net profit (excluding incentive costs) is 142 million yuan, with an increase of 14%, 14%, and an upper limit of 1.31 million, and 20%, respectively.

Corresponding to 23x24, the lower limit of net profit of return to home is 1.23 / 137 million yuan, with an increase of 13%, 11%, and an upper limit of 130 million, and 19%, 18% respectively.

Combined with the reported results, the equity incentive target guidelines correspond to the lower / upper limit of the apparent return net profit of the company's 23H2 to 83.659 million yuan, an increase of 28% over the same period last year.

Policy frequent + event catalysis, continue to be optimistic about the growth of fitness equipment leader recently, "National Fitness venues and facilities Promotion Action Plan", "guidance on promoting Sports to help Rural Revitalization work" and other policies have landed one after another, with a clear-cut emphasis on increasing the construction of sports venues and facilities, improving rural national fitness facilities, superimposing external environment to stabilize, and local procurement projects are also expected to speed up. In addition, catalyzed by international events such as the Chengdu Universiade, the Hangzhou Asian Games, the Men's Basketball World Cup, and non-governmental activities such as Village Chao and Village BA, the demand for physical fitness of residents is also expected to be further released.

We believe that, as a domestic leader with rich experience in bidding, the company has taken the lead in the Chinese fitness equipment industry, which started with contract manufacturing, has its own brand influence, has a profound overall layout, and is expected to fully benefit from this process. the follow-up growth is full of momentum.

Profit forecast and valuation:

The company's product end covers six fitness scenarios, with outstanding advantages of intelligent specialization; the channel side actively constructs the comprehensive layout of "ToC+ToB+ToG"; benefiting from the high demand for sports policy catalytic dividend + fitness equipment, it is expected to undertake the high prosperity demand of the industry. We are optimistic about the flexibility of the company's performance in the second half of the year and maintain the previous profit forecast. it is estimated that the company's return net profit from 2023 to 2025 will be RMB 1.70 billion, an increase of 27%, 23% and 21% respectively over the same period last year. Under the current market capitalization, the corresponding PE is 35-28-23, and the "buy" rating is maintained.

Risk Tips:

Industry competition intensifies; channel expansion and new product promotion are not as expected; industrial policies fall short of expectations; raw material prices fluctuate.