Incident: The company 24H1 achieved revenue of 4.61 billion yuan, -17.6% year over year; realized net profit of 0.89 billion yuan, or -42.3% year on year; realized net profit deducted from non-mother of 0.83 billion yuan, or -42.8% year on year. Among them, 24Q2 achieved revenue of 1.97 billion yuan, or -20.9%; realized net profit of 0.16 billion yuan, or -68.1% year-on-year; realized net profit of 0.12 billion yuan without return to mother, or -73.5% year-on-year.
Demand is recovering weakly, and growth is still under pressure at a high base. By brand, 24Q2 Tomson Beijian's main brand/Jianlituo/Life-SpaceCE domestic/LSG overseas revenue was -22.5%/-33.7%/-17.4%/-4.4%, respectively. The demand side recovered weakly at the industry level and maintained a strong competitive pattern, and the company level grew under pressure from a high base. By channel, 24H1 online/offline channels were -20.5%/-15.8%. Among them, the online channel base is higher. We expect the offline channel to be affected by the decline in pharmacy traffic; 24H1 domestic/overseas revenue is -16.8%/-21.9% YoY.
The industry maintains a high level of competition, and net interest rates are under pressure in the short term. The gross margin of the 24Q2 company was -3.6 pct year on year to 66.8%. We believe that the year-on-year decline in gross margin in 24Q2 is mainly due to the decline in online gross margin and changes in channel structure under the industry's more intense competition pattern. The 24Q2 sales/management expense ratio was +7.9/+2.4pct, respectively. We think it is mainly due to the impact of the company's pre-investment of expenses and the decline in revenue scale in the context of intense competition in the industry. In summary, the 24Q2 net margin was -12.6pct year-on-year to 8.2%, putting pressure on the profit side in the short term.
The medium- to long-term strategy is strong enough to continue to improve operational efficiency. 24H1's short-term performance was under pressure due to weak recovery in consumption, high competition in the industry, and an increase in short-term cost rates. 2024 is the beginning of the company's new three-year plan. The company adheres to a strong technology and strong brand strategy, and looks forward to 24H2. The company will promote the iterative upgrading of the two core products, replacing old and new products or disrupting short-term performance, but the medium- to long-term dimension is conducive to the company's price stability and improvement of operating efficiency; cost-side companies will actively optimize cost investment efficiency and boost profit performance. We believe that the health products industry is an Evergreen circuit, and the benefits of the company's internal adjustments will gradually be realized.
Investment advice: Considering that the industry maintains a high level of competition in the short term and the company is in a period of internal adjustment and optimization, we lowered our profit forecast and expect to achieve net profit of 1.2/1.46/1.63 billion yuan in 2024-2026 (the previous forecast was 1.814/2.068/2.255 billion yuan), -31.5%/+21.9%/+11.7% compared to the same period. The PE corresponding to the current stock price is 19/15/14 times, maintaining the “increase” rating.
Risk warning: Consumption recovery falls short of expectations, industry competition intensifies, and the cultivation of large single products falls short of expectations.