Event: The company released the 2024 semi-annual results report. 24H1 achieved revenue of 11.47 billion yuan, +24.5% year over year; realized net profit of 1.88 billion yuan, +29.0% year over year; achieved net profit without deduction of 1.84 billion yuan, or +28.4% year over year. Previously, the performance forecast was at the top of the 20-30% profit growth rate.
24Q2 revenue continued its rapid growth trend, driven by volume growth: Looking at 24Q2 alone, the company achieved revenue of 6.71 billion yuan, +20.8% year-on-year, continuing the rapid growth trend in Q1. The main reason was that as overseas sports brand inventory levels became normal, the company's orders showed continuous restorative growth, and the continuous progress of the company's new customer cooperation schedule compounded a steady increase in the share of major customers. In terms of volume and price breakdown, growth was driven by volume increase. Sales of finished shoes reached 0.062 billion pairs in 24Q2, or +18.9% year over year; the average unit price in RMB is expected to be +1.6% year over year, or driven by changes in the customer structure of most sports brands themselves maintaining steady ASP.
24Q2 Profitability remains at an excellent level, and the exchange contribution is small: the company continues to optimize processes and improve operational capacity while strengthening customer expansion and production capacity. 2024H1 gross margin and net margin both increased year over year. Among them, Q2 gross margin is expected to decline slightly from Q1, but is still expected to improve year over year, partly because the depreciation of the VND in Q2 contributed positively to gross margin. The net profit margin of 24H1 reached 16.4%, an increase of 0.6 points over the previous year. Among them, the Q1 and Q2 net interest rates were 16.5% and 16.3% respectively. Profitability remained steady and positive. The exchange contribution is expected to be significantly lower than in the same period last year, demonstrating the improvement in the company's actual operating capacity.
Continue to be optimistic about the certainty and flexibility of order improvement over 24 years: most overseas sports brands maintain healthy inventory levels, and subsequent order improvement trends are highly deterministic; recently, sports brands have released Q2 results. Most sports brands have performed well in Q2 and continue to be optimistic about the 24-year guidelines. The performance guidelines imply assumptions about future orders. Under the brand's optimistic performance guidance, they are optimistic about the certainty and flexibility of manufacturer order improvements, and leading manufacturers are expected to benefit more.
Investment rating and valuation: The company grows with existing customers while actively developing new high-potential customers. Vietnam continues to expand its factory and enter the Indonesian layout, and is expected to maintain a relatively rapid growth trend in the next few years. We expect the company's net profit to be 3.91, 4.54, and 5.22 billion yuan in 24-26. The current stock price corresponds to the 24-year P/E of 17x, maintaining the company's “Highly Recommended” rating.
Risk warning: the risk of changes in overseas tariff policies; the risk of order improvement falling short of expectations; the progress of capacity expansion falling short of expectations; the risk of rising labor costs