The company's 24Q2 revenue was 2.471 billion yuan, up 7.35% year on year, and net profit to mother was 0.17 billion yuan, up 8.65% year on year. The printing and dyeing business increased steadily. The gold business increased due to the combined contribution of Shang Jinyuan, the profitability of Q2 increased, and cash flow continued to grow. Considering Shang Jinyuan's merger, the net profit for 24-26 is estimated to be 0.768 billion yuan, 0.839 billion yuan, and 0.889 billion yuan, respectively. The current market capitalization corresponds to 24PE9.5X and 25PE9X, maintaining a highly recommended rating.

24Q2 revenue and net profit increased year over year. 24H1's revenue was 5.598 billion yuan, up 19.77% year on year, and net profit to mother was 0.298 billion yuan, up 6.44% year on year. 24Q2 revenue was 2.471 billion yuan, up 7.35% year on year, and net profit to mother was 0.17 billion yuan, up 8.65% year on year.

24H1 business split: The printing and dyeing business increased steadily, and the gold business contributed to the growth due to the merger.

1) Printing and dyeing business: Revenue of 1.935 billion yuan, up 5.88% year on year, total profit of 0.239 billion yuan, up 5.59% year on year, and sales margin of 12.37%.

2) Gold business: Sales volume of gold jewelry was 32.96 tons, a year-on-year increase of 30.39%. Revenue was 3.424 billion yuan, up 33.58% year on year, and total profit was 0.094 billion yuan, up 49.26% year on year. Among them, Hangmin Baitai's revenue was 2.362 billion yuan, a year-on-year decrease of 4.36%, and total profit was 0.057 billion yuan, a year-on-year decrease of 8.67%; Shenzhen Shangjinyuan consolidated revenue of 0.826 billion yuan in February-June, with a total profit of 0.035 billion yuan

24H1's profitability improved due to the structural decline in Shang Jinyuan's consolidated net interest rate.

1) 24H1: gross profit margin 16.03%, up 1.51 pct year on year, but net loss from fair value change was 0.197 billion yuan (hedging the risk of gold price fluctuations through gold leasing); period expense ratio was 5.07%, down 0.19pct year on year, with sales/management/R&D/finance cost ratios +0.17pct/-0.18pct/-0.4pct/+0.23pct, respectively; net profit margin 6.15%, down 0.58 pct year on year, mainly due to the gold business and structural characteristics decline.

2) 24Q2: Gross profit margin 17.5%, up 0.44pct year on year; the cost ratio for the period was 6.54%, up 0.46pct year on year, with sales/management/ R&D/finance expenses ratios +0.35pct/+0.06pct/-0.22pct/+0.28pct, respectively; net profit margin 8.01%, up 0.33pct year on year.

Cash flow increased year-on-year, and the number of inventory turnover days increased due to the combination of Shang Jinyuan. 24H1's net cash flow from operating activities was 0.754 billion yuan, up 66.37% year over year. As of the end of June '24, the number of inventory turnover days was 82 days, an increase of 11 days over the previous year, mainly due to the Shang Jinyuan merger; the number of accounts receivable turnover days was 12 days, an increase of 1 day over the previous year.

Profit forecast and investment suggestions: The company focuses on the dual main business of printing and dyeing+gold, continuing to promote the upgrading of the textile printing and dyeing industry, improving market position and bargaining power; expanding and strengthening the gold jewelry industry, enriching product categories, and strengthening integration and collaboration. Due to the rapid rise in gold prices, gold sales volume declined, and the company's gold processing business revenue fell short of expectations, so the profit forecast was revised. Considering the combined impact of Shang Jinyuan, the company's revenue is expected to be 11.831 billion yuan, 12.653 billion yuan, and 13.538 billion yuan respectively from 2024 to 2026, with year-on-year growth rates of 22%, 7%, and 7% respectively. Net profit attributable to mother was 0.768 billion yuan, 0.839 billion yuan, and 0.889 billion yuan, respectively, with year-on-year growth rates of 12%, 9%, and 6%, respectively. The current market value corresponds to 24PE9.5X and 25PE9X, maintaining a highly recommended rating.

Risk warning: risk of large fluctuations in gold prices; risk of terminal consumption falling short of expectations; risk of textile industry orders falling short of expectations, etc.