In 23 years, H1 revenue decreased compared with the same period last year, but revenue from the main clothing business increased year-on-year. In the first half of 2023, the company realized operating income of 1.096 billion yuan, year-on-year-2.63%; net profit of 47 million yuan, 9.22%; and net profit of 37 million yuan, 18.51% of the same period last year. The company's operating income decreased by 29.6577 million yuan compared with the same period last year, mainly due to a decrease of 35.6001 million yuan in grey cloth business, and the corresponding net profit decreased by 7.0904 million yuan, while the company's main clothing business achieved revenue of 1.012 billion yuan, an increase of 592.11 yuan over the same period last year. Basic earnings per share was 0.02 yuan, the same as the same period last year.

The gross profit margin has increased, but the increase in expense rate has led to a decrease in net profit margin. The company's gross profit margin in the first half of 2023 was 37.20%, year-on-year + 1.31pct; on the expense side, the expense rate during the first half of 2023 was 36.92%, year-on-year + 1.87pct, in which the sales expense rate / management expense rate / R & D expense rate / financial expense rate were 26.26%, 8.17%, 1.20% and 1.20%, respectively, and + 1.07pct/+0.08pct/+0.32pct/+0.40pct respectively. Among them, financial expenses increased by 41.17% over the same period last year, mainly due to the impact of exchange gains and losses; R & D expenses increased by 32.72% compared with the same period last year, mainly due to the increase in staff salaries after the company expanded its R & D team.

Due to the increase in expense rate, the company's net interest rate in the first half of 2023 was 4.44%, year-on-year-0.30pct.

Clothing business to maintain growth, promote offline stores to optimize and update. From a product point of view, the company's clothing / printing and dyeing / grey cloth / other products achieved revenue of 1.012 billion yuan / 28 million yuan / 6 million yuan / 30 million yuan respectively, which was + 0.59%, 12.22%, 85.76%, 95.83%, respectively, compared with the same period last year. The main clothing business maintained steady growth, and the company's revenue reduction was mainly due to the decrease in revenue from the grey fabric business. From a brand point of view, the company's HOdo menswear / OEM processed clothing achieved revenue of 767 million yuan / 245 million yuan respectively, year-on-year-2.42% Universe 11.34%; gross profit margin 47.50% Universe 11.12%, year-on-year + 4.77pct/-7.73pct. In terms of store channels, on the one hand, the company continues to optimize the channel structure and take the initiative to close inefficient stores; on the other hand, it continues to speed up the laying of a new generation of stores, increase the frequency of investment talks, and mobilize joint venture resources to open up blank points. accelerate the entry into the core position of the business circle to occupy the dominant position, and lock in the key customers and the rhythm of opening stores in the market. By the end of June 2023, the company had a total of 922 stores, of which 414 were directly operated stores and 508 joined joint venture stores, the total number of stores was the same as at the end of 2022, but 16 joined joint venture stores became direct stores in the first half of 2023. In the second half of 2023, the company aims to increase the net number of stores by 200, with the promotion of terminal brand image to promote high-quality development.

Create comfortable menswear products with differentiated competitive advantages, and use high potential energy resources to drive the spread of heat. Take the best-selling single product as the starting point, gradually win the recognition of users, industry, platform, channel merchants and other parties, continue to enrich the comfortable product matrix, and cooperate deeply with fabric suppliers such as HeiQ in Switzerland and Toray in Japan and scientific research institutions to effectively enhance product strength and cultivate differentiation advantages. At the same time, the company cooperated with Qi Wei, Zhang Xincheng, Zheng Kai, Zhang Binbin, Yuan Chengjie and other star talent to break the circle through magazine implantation, red carpet modeling, star store manager, video recommendation and other opportunities to quickly pry up the brand volume explosion. Appear in the "China International clothing Expo", "China Brand Day" and other large-scale exhibitions, through the continuous accumulation of user insight, back-feed crowd access strategy, strengthen the linkage between public and private sectors, and improve brand recognition.

Investment advice: the company has 65 years of brand history, accumulated strength, focusing on the classic comfortable menswear strategy, increasing independent product research and development and creating a new image of omni-directional comfort, with the ultimate products to meet the needs of consumers for comfortable menswear products. The company is actively engaged in channel upgrading, the future online is expected to continue to make efforts, the company still has a lot of room for development. It is predicted that the EPS of the company from 2023 to 2025 is 0.04,0.07 and 0.09 yuan respectively, and the corresponding PE is 68.3X, 46.3X and 35.6X respectively, maintaining the investment rating of "holding increase".

Risk hint: the risk of market demand change, the risk of product research and development, the risk of operation management, the risk of intensified competition in the industry.