occurrences
Company Announces 2024 Interim Report. With 2024H1, the company achieved total revenue of 4.613 billion yuan (-17.56%), net profit due to mother 0.891 billion yuan (-42.34%), and net profit not attributable to mother of 0.831 billion yuan (-42.83%). With 2024Q2, the company achieved total revenue of 1.967 billion yuan (-20.93%), net profit due to mother 0.164 billion yuan (-68.12%), and net profit of non-return to mother 0.122 billion yuan (-73.48%). The company plans to repurchase the total capital of 0.1-0.2 billion yuan of shares through centralized bidding with its own funds, and the repurchase price shall not exceed 20 yuan/share.
A high base affects revenue growth in the short term
1) By brand: 2024H1, the revenue of the company Tomson Beijian, Jianliguo, Lifespace, LSG, and other brands was 26.35, 5.91, 0.21, 0.511, 0.666 billion yuan, -19.77%, -16.81%, -24.79%, -4.72%, -15.21%, 24Q2, -22.48%, -33.85%, -17.47%, -4.36%, and -16.67%, respectively.
2) The decline narrowed on the Q2 line. 2024H1, the company's online and offline revenue was 1.953 and 2.629 billion yuan respectively, -20.54%, -15.82% YoY, -14.47% and -28.04% YoY in 24Q2.
3) Looking at home and abroad: 2024H1, the company's domestic and overseas revenue was 3.959 and 0.654 billion yuan respectively, -16.80% and -21.87% compared with the same period last year.
Gross margin is affected by increases in manufacturing costs and logistics costs. Expense investment is more rigid, and net interest rates are under pressure in the short term 1) Gross margin is affected by increases in manufacturing costs and logistics costs. 2024H1, the company's gross margin was 68.56%, -1.76pct year on year, 66.75% year-on-year, and -3.57pct year on year. In terms of split operating costs, the revenue share of 24H1, direct materials, direct labor, manufacturing costs, other, and other operating costs (logistics costs, etc.) was +0.09, +0.05, +1.29, -0.04, +0.36 pct, respectively. By channel, 24H1's gross margin of domestic direct management and distribution was -7.48 and -0.47 pct year on year, and gross margin of overseas direct management and distribution was -6.56 and +1.39 pct year on year. The gross profit margin of distribution was relatively stable.
2) Expense investment is more rigid, and net interest rates are under pressure in the short term. 2024H1, the company's net interest rate to mother was 19.31%, -8.30pct year on year; 24Q2 net profit margin was 8.36%, year-on-year - 12.37pct, mainly due to a decrease in gross margin, an increase in sales and management expenses, and a decrease in government subsidies. 2024H1, the company's sales and management expense ratios were 39.49% and 5.50%, respectively, +6.82 and +1.83pct. The increase in sales expenses was mainly due to lower revenue and more rigid wages and benefits, increased resource investment for variety shows and key products to increase brand awareness, and increased platform fees due to changes in e-commerce platform structure and increased paid traffic; the increase in management fee rates was mainly due to increased equity incentive fees, leasing and property management fees.
Online prospects are good, and multiple categories promote development
1) Multiple categories promote development together. The company's main brand expands the development space for all categories through a multi-combination product strategy of image products, star products, and high-potential products; in terms of large products, the super single product Jianlifuo continues to consolidate its leading position, and other high-potential single products use differentiated market strategies to accelerate development; at the same time, the company has increased its resource investment in LifeSpace to consolidate its leading position in the probiotic market specializing in segmented and functional segments.
2) Good prospects online. The company is making full efforts online, targeting the industry's online channel penetration rate (56%) and the company's leading offline channel market share. There is still room for improvement in the company's online channel market share, and the prospects for online channels are good.
Investment advice
We expect the company's net profit for 2024-2026 to be 1.145/1.411/1.645 billion yuan, respectively, with a growth rate of -34.44%/23.25%/16.57%, corresponding to PE 18/15/12X (market value 20.5 billion yuan) on August 6, respectively, maintaining a “buy” rating.
Risk warning
Risk of fluctuating consumption scenarios, risk of new product development falling short of expectations, and risk of policy adjustments.