Main points of investment:

The company reported results for the first half of 23 years, with revenue in line with expectations and lower-than-expected net profit performance. 1) the revenue performance in the first half of the year is stable, and profits are still recovering. 23H1 achieved 390 million yuan in revenue, up 1.4% from the same period last year, and its net profit was 56.25 million yuan (quoted from the company's interim results, the same below), down 24.9% from the same period last year, deducting 35.11 million yuan from non-parent net profit, down 35.3% from the same period last year. 2) 23Q2 is under short-term pressure in a single quarter. 23Q2 achieved 190 million yuan in revenue in a single quarter, up 1.3% from the same period last year, and its net profit was 19.9 million yuan, down 26% from the same period last year. Overall, the revenue performance was in line with expectations and the net profit performance was lower than expected, mainly due to the decline in gross profit margin and the increase in expense rate caused by the use of new smart manufacturing and logistics projects.

The overall performance at the operational level is sound. 1) the operation index of online stores is stable as a whole. 23H1's Rongmei high-end women's clothing store (accounting for 99.7% of revenue) achieved 120 million visitors, an increase of 75.7% over the same period last year, of which the number of new visitors increased by 103% to 80 million, the number of buyers placing orders increased by 4.7% to 1.548 million, and the total amount of orders placed increased by 1.3% to 1.21 billion yuan. The growth rate of the actual number of buyers and the total amount of orders issued here is slower than that of visitors, mainly due to the expansion of the statistical caliber of new visitors on the Taobi platform, resulting in an obvious increase in the number of apparent new visitors. the frequency of per capita consumption is basically the same at 2.1. 2) the growth rate of the studio is higher than that of the whole. In the environment of increasingly fierce competition for live broadcasting, the GMV of Rongmei high-end women's wear in the company's live studio increased by 12% compared with the same period last year, indicating that private domain traffic is increasing. The use of intelligent manufacturing and logistics distribution workshop has further improved the company's shipping capacity and automation level, and the company's total shipments increased by 18% in the first half of the year compared with the same period last year. The growth rate of shipments here is faster than that of GMV, which is expected to be mainly related to the temporary reduction of the overall selling price of products in order to adapt to the consumer environment.

Short-term decline in profitability and adequate operating cash flow. 1) the profitability of 23H1 has declined. In the first half of the year, the gross profit margin fell 2.5pct to 39.6% compared with the same period last year, mainly due to: 1) due to the influence of the Spring Festival earlier than last year, the sales period of winter clothing with high gross profit margin was shorter, and the proportion of sales of products with low gross profit margin increased in order to adapt to the changes in the market environment. The rate of sales expenses increased to 14.1% compared with the same period last year, and the rate of management expenses increased to 7.4%, mainly due to the commissioning of intelligent manufacturing and logistics and distribution workshops in mid-22, as well as increased staff recruitment, resulting in an increase in salary expenses and a significant increase in depreciation expenses, and the net interest rate finally dropped to 14.3%. 2) effective inventory control and adequate cash flow. The inventory of 23H1 was 320 million yuan, down 5.5% from the same period last year, and the net operating cash flow increased 29% to 56.26 million yuan over the same period last year, significantly improving. The monetary capital on the book was 510 million yuan, a net increase of 70 million yuan over the end of 22 years, the asset-liability ratio was only 6.7%, and the asset quality was sound.

The company ploughs the online women's wear market, creates the ultimate performance-to-price ratio with high quality and low price increase ratio, optimizes and integrates the supply chain, quickly reverses the innovation in high frequency, efficiently responds to the market demand and maintains the "overweight" rating. Considering that the current consumer environment is still in a weak recovery, out of careful consideration, we have slightly lowered the company's profit forecast for 23-24 and added a 25-year profit forecast for 23-25. The net profit for 23-25 is estimated to be 1.9 million yuan per annum (compared with 230 million in 23-24), and corresponding to PE in 21-17-15. In the medium and long term, the company is expected to rely on many years of online retail operation experience, with high-quality, cost-effective products, fully grasp the online growth dividend, and continue to increase market share. Still optimistic about its future growth space, maintain the "overweight" rating.

Risk tips: consumption recovery is not as expected; new product promotion is not as expected; market competition aggravates risks.