Incident: The company released the 2024 interim report. In the first half of the year, the company achieved operating income of 260.1055 million yuan, a year-on-year decrease of 26.39%; realized net profit of 40.7222 million yuan, a year-on-year decrease of 46.56%; realized non-net profit deducted from mother of 36.5633 million yuan, a year-on-year decrease of 50.23%. Among them, Q2 achieved operating income of 183.9746 million yuan, a year-on-year decrease of 35.57%; achieved net profit to mother 35.9077 Million yuan, a year-on-year decrease of 50.2%; realized non-net profit deducted from mother of 35.0314 million yuan, a year-on-year decrease of 52.07%
Comment:
The difference in exhibition schedules was the main reason for the year-on-year decline in the company's performance in the first half of the year. In the first half of 2023, the company held 9 offline exhibitions in 8 countries, with a total number of more than 4,600 booths; in the first half of 2024, it held 6 exhibitions in 4 countries, including building materials, textiles, industrial machinery, 3C, home appliances, electricity and new energy, pregnancy, babies and children, educational equipment, etc., with a total exhibition area of more than 3,600 companies. Four exhibitions in Poland, Germany, Brazil, and Mexico will be held in the second half of the year. According to the exhibition schedule, 10 exhibitions in 10 countries will be held in the second half of the year.
Create a professional exhibition, expand the scale of a single exhibition, and drive an increase in gross margin. Beginning in the second half of 2023, the company gradually transformed and upgraded to professional exhibitions, forming a business layout where several professional exhibitions are held at the same time. In the first half of 2024, the company's professional exhibitions expanded from 8 major industries to 11 major industries. Joint exhibitions in Indonesia, Vietnam, and the United Arab Emirates were exhibited in the form of 1+N (1 group exhibition and multiple professional exhibitions held at the same time), improving the exhibition effectiveness and transaction efficiency. The average number of booths in a single exhibition in the first half of the year was 800+, a significant increase over 600+ in the same period last year. The company's overall gross profit margin in the first half of the year was 54.18%, up 2.4 pcts year-on-year. The cost rate increased year-on-year during the period. Among them, the sales expense ratio was 25.6% /+7.61pct, which was mainly affected by the increase in rent and differential fees; the management expense ratio was 8.54% /+1.49pct, which was mainly affected by the increase in personnel remuneration.
Cooperative exhibitions are gradually taking shape, creating an “incubation platform for Chinese brands to go overseas”. The company has been deeply involved in overseas exhibitions for many years. Last year, it began cooperating with domestic and foreign exhibition companies such as Hanover Milan (Shanghai) to use the advantages of both parties to achieve overseas brand exhibitions. In the first half of the year, the company stepped up its cooperative exhibition efforts and successfully held new exhibitions such as the Education Equipment Exhibition, the Sporting Goods Exhibition, and the Metal World Expo. It is expected that more cooperative exhibitions will be launched in the second half of the year.
Investment advice: Miao Exhibition is expected to achieve net profit of 0.247 billion yuan, 0.326 billion yuan, and 424 million yuan in 2024-2026, with year-on-year growth rates of 30.18, 23.9% and 22.71%. EPS is expected to be 1.08 yuan/share, 1.42 yuan/share and 1.85 yuan/share in 2024-2026, and 14X, 11X and 8X for 2024-2026, respectively. I am optimistic about the company's continued development in the overseas exhibition industry, and give it a “buy” rating.
Risk warning: The company has risks such as changes in macroeconomic growth, changes in the international trade environment, changes in trade barriers, changes in tariff policies, changes in subsidy policies for enterprises to participate in overseas exhibitions, political, economic, and social changes in the host country, and fluctuations in international exchange rates
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