24Q2 revenue is expected to increase by 21% with net profit of 1.1 billion, with net profit up of 12%. The company released a 24H1 performance report; 24Q2 revenue is 6.7 billion, up 21% year over year (forecast growth rate of 13 to 30%); net profit due to mother of 1.1 billion, up 12% year on year (forecast growth rate of -2% to +13%); Q2 net profit margin is 16.3%, a decrease of 0.3 pct year over year. We expect a year-on-year decrease of 1.3 pct. We expect a year-on-year decrease of 1.3 pct. There are many, and the profit level may be more stable after excluding exchange factors.
24H1's revenue was 11.5 billion, up 25% year on year, net profit was 1.9 billion yuan, up 29% year on year, and net profit margin was 16.4%, up 0.6 pct year on year.
24H1 sells 0.108 billion pairs of sneakers, an increase of 18.3% over the previous year. We estimate that ASP is about 106 yuan/pair, an increase of 5% over the previous year. ASP increases orders from brands with higher unit prices for major products or products are growing faster, driven by customer structure optimization.
Along with the continuous progress of cooperation with the company's new customers and the steady increase in the share of major customers, the company's sneaker sales volume and revenue grew steadily. The company continues to promote cooperation with new customers, actively expand production capacity, and optimize processes and improve operational capacity. 24H1 gross profit margin and net profit margin all improved year-on-year.
Growth continues to lead the industry. Major customer Deckers has impressive financial reports. Judging from the performance of the industry, the 24H1 revenue growth rates of Fengtai and Yuyuan's manufacturing businesses were 6.8% and 2.4% respectively. Huali's performance continued to lead the industry, or was driven by a steady increase in share and an increase in new customers.
Judging from the performance of major customer brands, Nike's revenue remained flat year on year from March to March '24 (neutral exchange rate), but we believe that with a steady share and order contributions from other customers, Nike's influence on Huali was limited; Deckers continued to perform brilliantly, with revenue rising 23% (excluding exchange rate influence) from April to April 2024 (excluding exchange rate influence), leading to a 10% increase for the whole year; in addition, brands such as Reebok and Onrun (revenue guide growth rate of 30% + in '24) are also expected to contribute more .
Maintain production capacity expansion and put new plants into operation one after another
24H1's new plant was initially put into operation and shipped; considering market demand, the company is expected to continue to actively expand production capacity in the next few years. It plans to build several new plants in Indonesia and Vietnam within the next 3-5 years to match future order growth and maintain production capacity flexibility.
Maintain profit forecasts and maintain “buy” ratings
The company has achieved remarkable results in strengthening cooperation with high-quality customers. Major customers have grown excellently, driving the company's order growth.
We estimate that the company's net profit for 24-26 will be 3.89/4.43/4.95 billion yuan, EPS will be 3.3/3.8/4.2 yuan/share, respectively, and the corresponding PE will be 18/16/14X, respectively.
Risk warning: Downstream demand falls short of expectations; rising raw material and labor costs; capacity expansion falls short of expectations; exchange rate fluctuations and other risks; quick performance reports are only preliminary accounting results. The detailed financial data is subject to the company's official semi-annual report.