Core views
The decline in the company's revenue and performance in the first half of the year was mainly due to changes in the timing of some exhibitions compared to the first half of last year. 24H1 held offline exhibitions in 4 countries, and the rest of the exhibitions will be held at 24H2. 24H1 gross margin increased steadily, and the contract debt balance increased significantly compared to the beginning of the year. Core regions such as Belt and Road and RCEP countries have increased the influence of the exhibition. 24H1 expanded to 11 major professional exhibitions, and actively built a “Chinese brand exhibition incubation platform” to enhance the efficiency of buyers and sellers with digital and AI capabilities. Expand new markets during the year, and the semi-annual dividend ratio is impressive. Equity incentives will be implemented during the year to help subsequent development.
occurrences
The company released its 2024 semi-annual report. In the first half of the year, revenue was 0.26 billion yuan, -26.39% year over year, and net profit to mother was 40.7222 million yuan, or -46.56% year over year.
Brief review
The first half of the year was affected by the pace of exhibitions, and the influence of the core regional exhibition gradually increased, and the company's revenue and performance declined in the first half of the year. Compared with the first half of last year, some exhibitions were held in 8 countries in the first half of 2023, while offline self-hosted exhibitions were held in 4 countries in the first half of 2024. Other exhibitions will be held in the second half of 2024, mainly due to the problem of delayed exhibition; the revenue of 24Q2 alone was 0.184 billion yuan, compared with a net profit of 35.91. Million yuan, -52.2% YoY; 24H1 gross profit margin 54.2%, +2.4pct YoY. The cost rate during the 24H1 period was 34.7%, +8.6pct year-on-year, with sales expenses accounting for a significant increase. 24H1 net operating cash flow was $72.7208 million, -60.44% YoY. At the end of 24H1, the contract debt balance was 0.167 billion yuan, +73.1% compared with the end of 2023, mainly due to the increase of 24H1's advance payment for the exhibition in the second half of the year.
The subsidiary Miolante Technology has net profit of 17.5748 million yuan, Guangdong Miolante 23.7587 million yuan, and China Textile Advertising Company 10.3192 million yuan.
24H1 successfully held six overseas joint exhibitions of Chinese brands including building materials, textiles, industrial machinery, 3C, home appliances, electricity and new energy, pregnancy, infants, educational equipment, etc., in 4 countries of the Belt and Road Initiative (UAE) and RCEP countries (Japan, Indonesia, Vietnam). Nearly 3,500 companies from more than 20 provinces and cities in China participated in the exhibition. The total exhibition area exceeded 0.11 million square meters, and the total intended turnover was nearly 4 billion US dollars. Judging from the contributions of individual exhibitions, there may be a certain increase, reflecting the gradual cultivation of market influence in core regions. Local exhibitors appeared at the Japan, Indonesia, and Dubai exhibitions, and the exhibitors were gradually internationalized.
Professional exhibitions are gradually refined to create a brand effect, and the ability to go overseas has been expanded from 8 major industry professional exhibitions in 2023 to 11 major professional exhibitions. Group exhibitions in Indonesia, Vietnam, and the UAE use 1+N (1 group exhibition and multiple professional exhibitions are held at the same time), and professional cultivation and brand effects are constantly improving; at the same time, the company has created a “Chinese Brand Exhibition Overseas Incubation Platform” service model. The incubation platform is beginning to take shape. Domestic resources and overseas resources can be incubated within the year, such as the “2024 China Sports Fair (Indonesia)” landing.
The company continues to lay out and iterate digitalization and AI capabilities. Through years of global exhibitions, the company has accumulated nearly 17 million pieces of high-quality supplier data and buyer data from all industries, helping buyers and sellers to connect efficiently during and after the exhibition. In the second half of the year, the company is expected to expand the US market and continue to expand the scope of the global exhibition layout, which is expected to bring about a 2024 semi-annual profit distribution plan, which will distribute a cash dividend of 3.00 yuan (tax included) to all shareholders for every 10 shares, totaling 67.7826 million yuan in cash dividends, accounting for about 95.7% of the profit that can be distributed in the 2024 half year. The company's equity incentive plan was implemented during the year, in line with the repurchase plan, and it is hoped that business development will continue to be stimulated in the future.
Investment advice: Net profit due to mother is expected to be 0.237 billion yuan, 0.321 billion yuan, and 0.407 billion yuan from 2024 to 2026. The PE corresponding to the current stock price is 15X, 11X, and 9X, respectively, maintaining the “gain” rating.
Risk analysis
1. Deep changes in the global environment under geographical risk may have a certain impact on the smoothness of the company's overseas exhibition, acquisition of local resources and communication, etc., and may affect the progress of the exhibition and revenue recognition;
2. While overseas exhibitors are still resilient in global inventory and consumption in major countries, direct competition and influence on domestic exhibitors who go overseas to host exhibitions may divert the choices of domestic exhibitors;
3. Export amounts, etc. are mitigated by trade and the global environment, which may affect exhibitors' willingness to participate overseas; 4. The brand effect cultivation of the company's professional exhibition matrix may not meet expectations, or individual exhibitions are subject to significant market competition factors; 5. Other operational and market-side risk factors.
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