Matters:
The company released its 2024 semi-annual report. In 2024, H1 achieved total operating income of 1.99 billion yuan, a net profit of 0.154 billion yuan, an increase of 52.7%, net profit after deducting non-return to mother of 0.154 billion yuan, an increase of 55.5%; a single Q2 achieved revenue of 1.04 billion yuan, an increase of 23.3%, and net profit to mother of 0.091 billion yuan, an increase of 27.4%. , an increase of 21.2%.
Commentary:
China and Europe performed steadily, and the American business continued to grow rapidly. In the first half of '24, the American business achieved rapid growth due to a strong low base of orders, and European business expansion progressed steadily. Despite the weakness of the industry in China, there was still a positive increase in the company's active customer expansion. Specifically, 24H1 BfS revenue also increased 57%. Endogenous China/America/Europe/Asia Pacific increased by +4.2%/+80.3%/+13.8%/+185.7%, respectively. Looking at single Q2, combined with company exchanges, BfS increased revenue by about 60% year over year with order recovery and cross-sales implementation; endogenous China had a medium to high single-digit increase, with channel providers and up-and-coming brand expansion leading the expansion; Europe continued to increase in double-digit year-on-year growth; and endogenous growth orders in America were mainly due to fluctuations in order fulfillment growth between quarters, and an acceleration in Q3 can be expected under strong demand. Overall, 24Q2 revenue also increased 23%, and the incentive target for the whole year progressed according to plan.
Endogenous profit remained high, BF's month-on-month losses remained flat, and performance was in line with the forecast center. 24Q2 benefited from scale effects, cost reduction and procurement optimization, and increase in the share of service fees (quarterly unsustainable), with gross margin increasing 2.4 pcts to 33.4%; investment in personnel, R&D, etc. increased under the company's vigorous expansion, and sales/R&D expense ratios were +0.6/+0.7 pcts year-on-year, respectively; the same management fee rate fluctuated by 0.4 pcts mainly due to quarterly fluctuations, and the annual optimization trend did not change; the same increase in the financial expense ratio +1.4pcts was mainly affected by an increase in bank interest and exchange profit and loss; the higher income tax rate decreased by 4.4pcts to 4.4pcts 17.0% Looking at the main subjects: 1) BfS: After excluding amortization, the loss was about 2170w and the net interest rate was -9.2%, which was a significant loss compared to -17.3% in the same period last year, while the net interest rate remained flat at -9.7% month-on-month. First, it was due to some incoming processing orders not being fulfilled in a timely manner. Second, personnel and organizational structure optimization caused one-time costs, but order demand was strong, and the company also strengthened supply chain management. 2) Endogenous business: The net profit for 24Q2 is estimated to be about 0.11 billion yuan. The net interest rate was basically the same as the high base for the same period last year. The increase in gross margin is expected to be hedged by increased investment in sales and R&D expenses. Overall, 24Q2 achieved a net profit margin of 8.8%, an increase of 0.3 pcts, and net profit to mother increased by about 27.4%, which is in line with the forecast center.
H2 orders can be landed and accelerated, and long-term momentum continues to be consolidated. Looking ahead to H2, demand in the Americas continues to be strong (currently BfS has been completed & orders have reached nearly 80% of the annual target); new products such as astaxanthin have been launched in China, and the Asia-Pacific Australian Jiabao business will begin to generate revenue. Europe will continue to dig deeper into customer demand. The multi-pronged order implementation is expected to drive revenue growth. The scale effect and BfS loss reduction will also drive impressive growth in performance. At the same time, the company's medium- to long-term competitiveness continues to strengthen: on the sales side, in the face of rapid iteration of demand and channel practices, China has summed up and upgraded explosives development methods (emulsion calcium has achieved tens of millions of revenue in the past half year), closely following the live e-commerce layout, while overseas have opened up major global customer platforms and strengthened synergies to fuel growth for the next 2-3 years; on the R&D side, E-cube Bionic Efficiency Platform was released, and began participating in the formulation of international standards for some industries; in the supply chain, flexible production, global procurement, cost reduction and efficiency are also taking a solid step forward..
Investment advice: There are plenty of incentives and confidence throughout the year, and high H2 growth is expected to catalyze, reaffirming the “strong push” rating. Q2 performance continues to deliver on incentive targets. In the short term, confidence is sufficient throughout the year, and H2 acceleration is expected to be catalyzed. From a medium- to long-term perspective, on the basis that the company benefits from aging penetration, the competitive advantage is outstanding and growth momentum continues to be consolidated. Maintaining the 24-26 performance forecast of 0.397/0.503/0.609 billion yuan (including incentive fees), corresponding to PE 14/11/9X, maintaining a target market value of 8 billion yuan and a target price of about 34 yuan, corresponding to 24E PE 20X, reaffirming the “strong push” rating.
Risk warning: BfS performance falls short of expectations, rising raw material costs, weak terminal demand, food safety risks.