The company released the 2024 semi-annual results forecast

The company's 24Q2 revenue was 6.29-7.21 billion, up 13-30%; net profit to mother was 0.96-1.1 billion, up -1.6%-13.4%. 24H1's revenue was 11.05-11.98 billion, up 20%-30%; net profit to mother was 1.75-1.89 billion, up 20-30%.

The growth is mainly due to continued progress in the company's cooperation with new customers, and the steady increase in the company's share of major customers. Previously, as sports brand product inventories became normal, the company's orders gradually resumed growth in Q4 '23.

From April to April '24, Fengtai's revenue increased 4.4%/16.6%/0.8%, respectively; Yuyuan increased 2.5%/8.3%/2.9%, respectively. Compared with peers, Huali performed relatively well and was leading in growth.

The footwear industry where the company is located is a labor-intensive industry. The factory is large, and the demand for labor is high. The products are mainly sold to overseas regions such as Europe and America. Therefore, the company's factory site selection will comprehensively consider various factors such as labor resources, shipping and logistics, and the international trade environment. Over the next 3-5 years, the company will build several new plants in Indonesia and Vietnam to actively expand production capacity.

Using a high-quality multi-customer strategy to develop customers, Nike's share continues to increase

The company's customer strategy is a high-quality multi-customer strategy, and there is no specific limit on the number of brands to cooperate with. As a high-quality manufacturer in the industry, the company has a good reputation and can attract customers to actively seek cooperation. In addition, the company's factory is large, and when accepting customers, it will comprehensively consider various factors such as order size, future continuous growth, and the degree of compatibility between the two teams.

The company's Nike share continues to rise, mainly because the company ranked high in routine assessments and won gold medals for many consecutive quarters. In addition, the sports footwear categories that the company excels at, such as jogging shoes and fashion casual sneakers, are among Nike's largest categories in recent years.

Maintain profit forecasts and maintain buying ratings

While strengthening customer expansion and continuous expansion of production capacity, the company gradually improves operating capacity, thereby maintaining steady growth in net profit. We maintain our profit forecast. The company's net profit for 24-26 is 3.89/4.43/4.95 billion yuan, EPS is 3.3/3.8/4.2 yuan/share, respectively, and the corresponding PE is 17/15/14X, respectively.

Risk warning: Downstream demand falls short of expectations; fluctuations in raw material and labor costs; capacity expansion falls short of expectations; risk of exchange rate fluctuations, etc. The performance forecast is only a preliminary estimate, subject to the company's financial report.