Core views:

Company Announces 2024 Interim Report. 2024H1 achieved revenue of 5.598 billion yuan, +19.77% YoY, net profit attributable to mother 0.298 billion yuan, +6.44% YoY, net profit not attributable to mother 0.292 billion yuan, +9.82% YoY. Among them, Q2 achieved revenue of 2.471 billion yuan, +7.35% year-on-year, net profit of 0.17 billion yuan, +8.65% year-on-year, and net profit of 0.164 billion yuan without return to mother, +13.99% year-on-year.

By business: (1) Printing and dyeing business: 2024H1 achieved revenue of 1.935 billion yuan, +5.88% year over year, total profit of 0.239 billion yuan, +5.59% year on year, sales margin of 12.37%, and -0.03 pct year on year.

According to information from the China Printing and Dyeing Industry Association, the revenue of printing and dyeing enterprises above the 2024Q1 scale was +11.36%, sales profit margin was 3.03%, and the year-on-year profit margin was +1.44pct. The loss ratio was 43.28%, and the export volume of eight categories of products was +6.54% year-on-year. Despite weak domestic demand, export pressure, and intense competition in the printing and dyeing industry, the company actively explores the market, and the overall printing and dyeing business has achieved steady growth. (2) Gold jewelry business: 2024H1 achieved revenue of 3.424 billion yuan, +33.58% year on year, total profit of 0.094 billion yuan, +49.26% year over year, gold jewelry sales volume of 32.96 tons, +30.39% year over year. The high increase in gold business was mainly due to the company's acquisition of Shenzhen Shangjinyuan and consolidated in February 2024; Shenzhen Shangjinyuan 2024H1 achieved revenue of 0.826 billion yuan, total profit of 0.035 billion yuan.

Q2 Profitability continued to improve, and overall expenses remained stable during the period. 2024H1's gross margin/net margin/ net margin after deduction of non-return net margin was 16.03%/6.15%/5.22%, +1.51/-0.30pct; sales/management/R&D/finance expenses ratio 1.33%/2.00%/1.70%/0.04%, +0.17/-0.40/+0.23pct year over year. 2024Q2's gross sales margin/net margin/net profit margin after deducting non-return to mother was 17.50%/8.01%/6.65%, +0.44/+0.33/+0.39pct year-on-year.

Profit forecasting and investment advice. EPS is expected to be 0.74 yuan/share, 0.85 yuan/share, and 0.93 yuan/share in 2024-2026, respectively. The company will continue to adhere to the “textile printing+gold jewelry” dual business. Referring to the average PE and comparable company valuations in the past three years, the company will give 2024 12 times PE, corresponding to a reasonable value of 8.94 yuan/share, and maintain a “buy” rating.

Risk warning. Risk of fluctuations in raw materials, risk of fierce market competition, risk of sluggish demand.