Key points of investment
Tomson Beijian released its 2024 semi-annual report. 2024H1 achieved revenue of 4.613 billion yuan, a year-on-year decrease of 17.56%, and realized net profit to mother of 0.891 billion yuan, a year-on-year decrease of 42.34%. In 2024Q2, the company achieved revenue of 1.967 billion yuan, a year-on-year decrease of 20.93%; realized net profit to mother of 0.164 billion yuan, a year-on-year decrease of 68.12%.
Base disturbances still exist, and operations continue to be under pressure
2024Q2's main brand “Tomson Beijian” achieved revenue of 1.09 billion yuan, a year-on-year decrease of 22.48%; the largest single product, Jianliguo, achieved revenue of 0.218 billion yuan, a year-on-year decrease of 33.74%; the decline in the main brand and Jianli increased month-on-month. The domestic probiotic brand Life-Space achieved revenue of 0.09 billion yuan, a year-on-year decrease of 17.43%; the overseas brand LSG achieved revenue of 0.258 billion yuan, a year-on-year decrease of 4.44%. With the split of channels, 2024H1 achieved revenue of 2.629 billion yuan from offline channels, down 15.82% year on year, while online channels achieved revenue of 1.953 billion yuan, down 20.54% year on year.
During the period of channel transformation, cost investment increased
Affected by the decline in gross margin of online channels, the gross margin of 2024Q2 was 66.75%, -3.57pct year on year, and the sales expense ratio was 50.64%/6.52%, +7.91/+2.38pct year on year. We believe that the higher sales expenses rate may be due to changes in the e-commerce platform structure and the increase in paid traffic. The 2024H1 platform fee increased 20.48% year over year, and the net margin of the 2024Q2 company was -12.57pct to 8.19% year over year. Although the online channel launch has brought short-term pressure on the cost side, it is a necessary path for the company's strategic transformation, and it is expected that it will gradually contribute revenue in the future.
Follow the 2024H2 iterative upgrade of new and old products
2024 is the beginning year of Tomson's new three-year plan. The company continues to use scientific research capabilities to empower products and lead the high-quality development of the industry: 2024H1 Tomson Beijian obtained 44 patents, including 8 invention patents for raw materials and formulations, and 8 health food registration approvals. 2024H2 will actively adjust the overall business strategy and cost investment model, promote the iterative upgrading of the two core products, and pay attention to the progress and market feedback of the replacement of old and new products.
Profit Forecasts, Valuations, and Ratings
The company is a leader in the domestic VDS industry. The strategic transformation will inevitably be painful, but it is expected to continue to benefit in the context of aging.
Considering the short-term pressure on terminal demand and increased investment during the transition period, we adjusted the company's revenue forecast for 2024-2026 to 8.742/9.399/10.113 billion yuan, with year-on-year growth rates of -7.07%/7.52%/7.59%, respectively, net profit of 1.22/1.494/1.711 billion yuan, year-on-year growth rates of -30.12%/22.40%/14.53%, EPS of 0.72/0.88/1.01 yuan/share, respectively, to maintain “buying” ratings.
Risk warning: food safety risk, risk of channel expansion falling short of expectations, risk of rising raw material prices