Event: The company announced its interim results for fiscal year 2024. The company achieved operating income of HK$8.938 billion, -3.8% year-on-year, net profit attributable to the parent company of HK$1,136 million, +4.0% year-on-year, and net profit deducted from non-return to the parent company of HK$1,288 million, +9.7% year-on-year.
The company's revenue for the first half of the fiscal year was under slight pressure, and the performance of the RMB caliber was steady. The company announced the interim results announcement for fiscal year 2024. The company achieved operating income of HK$8.938 billion, -3.8%, RMB caliber +1.6%, net profit attributable to the parent company of HK$1,136 million, +4.0% year-on-year, and +9.8% in RMB, net profit of HK$1,288 million, and net profit of HK$1,288 million, +9.7% year-on-year, and RMB +15.8%. In the face of changes, the company strives to continuously seize opportunities to consolidate internal skills and drive continuous growth with the company's core growth value
Raw materials have declined markedly, and profit margins have increased significantly. In the first half of the FY2024 fiscal year, the gross profit margin of the Chinese market was 41.2%, up 1.3 pct year on year. The main reasons were a combination of lower raw material costs and lower ASP; the gross profit margin of the North American market was 35.9%, down 5.9 percentage points from the previous year, mainly affected by shipping surcharges, which were actually +5.1% after excluding shipping surcharges; and the European and other overseas markets achieved a gross profit margin of 27.4%, up 6.1 pct year on year, mainly due to lower raw material costs.
Domestic sales: The recovery of the Chinese market is obvious, and the performance of the RMB caliber is impressive. In the first half of the FY2024 fiscal year, the Chinese market revenue was HK$6.50 billion, up 5.1% year on year. According to the RMB sales scale, Chinese market revenue increased 11.0%, online and offline increased 6.3% and 17.5% year on year respectively, and sofas and mattresses increased 7.1% and 13.3% year on year respectively. Looking forward to the future, the company continues to adhere to the overall layout of channels, products, brands, distributors and production capacity, strengthen competitiveness in all dimensions, and further increase market share.
Export sales: Overseas markets are under slight pressure, export inventory is rapidly being removed, and rapid growth is expected in the future. Revenue from the North American market was HK$2,037 billion, down 20.5% year on year. Excluding the impact of shipping surcharges, US market revenue actually fell 5.4%, which was slightly under pressure; European and other overseas market revenue was HK$532 million, down 20.6% year on year. Excluding the impact of the decline in iron frame business, sofa revenue in the European market fell 8.8%. The company is actively developing its business in North America. Shipping costs have been fully reduced, the drag on net interest rates will improve markedly, and export profits will continue to rise.
Channel expansion has achieved remarkable results, and product integration continues to accelerate, maintaining a “highly recommended” investment rating. As a leader in the software industry, the company has a leading global production capacity layout. Domestic sales online and offline are mutually empowering, and store expansion is progressing steadily, which is expected to contribute to new growth in performance. We expect the company's net profit from fiscal year 2024 to fiscal year 2026 to fiscal year 2026 to be HK$21.76, 25.44 and HK$2,886 billion respectively. The corresponding PE is 9.8X, 8.4X and 7.4X respectively, maintaining a “highly recommended” rating.
Risk warning: risk of raw material price fluctuations, international trade risk, risk of large fluctuations in real estate sales.