Core views:
The company announced its 2024 semi-annual results report. The company's revenue for the first half of 2024 was 11.472 billion yuan, up 24.54% year on year, net profit to mother was 1.878 billion yuan, up 29.04% year on year, net profit after deducting 1.845 billion yuan, up 28.43% year on year. Among them, single-quarter revenue for the second quarter was 6.707 billion yuan, up 20.83% year on year, and net profit to mother was 1.091 billion yuan, up 11.94% year on year after deducting net profit of 1.068 billion yuan, up 10.82% year over year. The company sold 0.108 billion pairs of sneakers in the first half of 2024, up 18.25% year on year. Among them, the second quarter sold 0.062 billion pairs of sneakers in a single quarter, up 19.23% year on year.
The company's performance grew steadily in the first half of 2024, and the 2024Q2 performance exceeded expectations. As sports brands' product inventory levels became normal, company orders began to gradually resume growth in the fourth quarter of 2023. In the first half of 2024, as the company continued to advance cooperation with new customers and a steady increase in the share of major customers, the company's sneaker sales and revenue grew steadily. At the same time, the company continued to optimize processes to improve operating capacity, and gross margin and net interest rate increased year-on-year. According to the previous performance forecast, the company's 2024Q2 net profit changed -1.56% to +13.38% year-on-year. The current 2024Q2 results are at the upper end of the performance forecast range, exceeding expectations. The 2024Q2 net profit growth rate is lower than the revenue growth rate, which is expected mainly due to the company's high exchange earnings base for the same period last year.
Optimistic that 2024Q3 results will accelerate month-on-month. First, the base for the same period last year was low, and there was little fluctuation in exchange profit and loss. 2023Q3's revenue and net profit to mother changed by -6.92% and -5.93%, respectively.
Second, the company's customers have excellent quality, and downstream demand is stable. Finally, according to investor relations management information, the company's new plant in Indonesia, which was put into operation in the first half of 2024, has already begun shipping.
Profit forecasting and investment advice. The company's EPS is expected to be 3.32 yuan/share, 3.83 yuan/share, and 4.38 yuan/share in 2024-2026, respectively. The view that the company has a reasonable value of 73.08 yuan/share remains unchanged, corresponding to a 24-year PE of 22 times, maintaining the “buy” rating.
Risk warning. The risk of major customers stopping or reducing procurement; the risk of fluctuating raw material prices; the risk of rising labor costs; the risk of international operation and management.