Core views:

Event: The company released the 2024 semi-annual report forecast. (1) According to the company announcement, 24H1, the company expects to achieve operating income of 4.15-4.25 billion yuan, an increase of 49.7%-53.3% over the previous year. Net profit to mother was 0.23-0.25 billion yuan, up 51.6%-64.9% year over year. After deducting non-net profit of 0.2-0.22 billion yuan, the year-on-year increase was 41.8%-55.9%. The amount of non-recurring profit and loss is about 26 million yuan, mainly due to increased income from investment and financial management. (2) Single 24Q2: The company expects to achieve revenue of 2.35 to 2.45 billion yuan, an increase of 53.7%-60.3% over the previous year. Net profit to mother was 0.14-0.16 billion yuan, up 44.3%-64.6% year over year. After deducting non-net profit of 0.13-0.15 billion yuan, the year-on-year increase was 36.3%-57.0%.

The company continues to adhere to the development strategy of branding overseas, increase brand incubation efforts, improve brand operation efficiency, and expand brand development channels, which is significantly driving the growth of main business revenue. The main growth points in 2024: (1) leading brands try to “break out” of new brands such as Amazon and women's clothing; (2) develop new channels such as Tiktok and Temu to enhance channel diversity and increase brand volume; (3) regional distribution: mainly in the US, increasing the layout of regions with relatively strong consumption power, such as Europe.

According to the company's announcement, the estimated impact of non-recurring profit and loss on the company's net profit is about 26 million yuan, mainly due to the increase in the company's investment and wealth management income.

Profit forecasting and investment advice. The company is expected to achieve overall operating income of 8.93/11.73/14.91 billion yuan in 2024-2026, a year-on-year change of 36.1%/31.4%/27.1%; net profit to mother is 0.46/0.61/0.82 billion yuan, respectively, with a year-on-year change of 36.9%/33.4%/33.0% year-on-year in 24-26. Considering that the company's optional categories are more flexible than comparable companies (pan-category cross-border e-commerce), we gave the company a 2024 22x PE valuation, with a reasonable value of 25.25 yuan/share, giving it an “gain” rating.

Risk warning. Third-party platform stores are closed; the Amazon platform is highly concentrated and highly dependent on a single channel; inventory management: the inventory turnover ratio of categories has declined, leading to the consumption of cash flow, etc.