Incident review

The company announced the 2024 semi-annual results report. 24H1 achieved revenue of 11.47 billion yuan, +24.5% year on year, realized net profit of 1.88 billion yuan, +29.0% year on year, and net profit after deducting non-return to mother was 1.85 billion yuan, +28.4% year on year; of these, 24Q2 achieved revenue of 6.71 billion yuan, +20.8% year on year, net profit to mother of 1.09 billion yuan, +11.9% year-on-year, net profit after deducting net profit of 1.07 billion yuan billion yuan, +10.8% compared to the same period last year. The company's revenue performance is in line with the previously forecast range.

Incident reviews

Order sales increased dramatically, and ASP continued to improve. In terms of revenue split volume and price, the sales volume of 24H1 sneakers was 0.108 billion pairs, up 18.7%, and ASP was 106 yuan/pair, up 4.9%. Thanks to downstream customer inventory and a good customer structure, sales volume grew rapidly and average price increased; among them, the company's 24Q2 sales volume was 0.062 billion pairs, up 19.2%, and ASP was 108 yuan/pair, up 1.3%. The sales growth rate remained high. Continuing the trend in the first quarter, the ASP growth rate slowed down.

Net interest rates have continued to rise, and tax rates have increased. The company's 24Q1/24Q2/24H1 net interest rate was 16.5%/16.3%/16.4%, respectively, with year-on-year changes of +3.4pct/-1.3pct/+0.6pct, respectively. 23Q2 was affected by exchange factors. If this factor is excluded, the net interest rate to mother continued to rise in the Q1 trend, mainly due to: 1) gross margin continued to be high in Q1, and the depreciation of the Vietnamese dong brought positive contributions; 2) period cost rate optimization.

Furthermore, the 24H1 tax rate is 23.4%, compared to 20.1% in the same period last year. The increase in the tax rate is a dividend factor.

Profit forecast and investment advice: Considering the rapid growth in sales volume and good net interest rate performance in the first half of the year, we raised our profit forecast. We expect net profit to be 3.88 billion yuan/4.46 billion yuan/5.13 billion yuan respectively from 24 to 26, corresponding to PE of 17 times/15 times/13 times, maintaining a “buy” rating.

Risk warning:

Industry sentiment falls short of expectations, customer order growth falls short of expectations, etc.