The company released the 24H1 interim report, achieving operating income of 2.296 billion yuan, a year-on-year increase of 25.6%, and achieved net profit of 0.416 billion yuan, an increase of 37.8% over the previous year, exceeding market expectations. Among them, 24Q2 revenue and net profit to mother increased by 32.2% and 36.2%, respectively. 2024H1 plans to pay $10 2, with a cash dividend of 0.23 billion, and a dividend payout ratio of 56%.

By product, revenue from 24H1 zippers, buttons and other clothing accessories increased by 24%, 27.1%, and 23.2%, respectively. By region, 24H1 domestic and overseas revenue increased 24.8% and 27.2%, respectively.

The company's capacity utilization rate has improved markedly. 24H1's comprehensive capacity utilization rate was 70.7%, compared to 57.1% in the same period last year; when broken down, domestic and overseas capacity utilization rates were 75.5% and 49.6%, respectively, compared to 58.9% and 44.7% for the same period last year.

The increase in gross margin+other earnings led to a marked improvement in profitability. 24H1's comprehensive gross margin increased 0.6 pct year over year. Looking at the breakdown, the gross margin of zippers and buttons increased 0.3 pct year over year, respectively. Our judgment is mainly due to an increase in capacity utilization and internal efficiency. 24H1's other revenue was 0.037 billion, compared to 0.008 billion in the same period last year, a significant increase over the previous year, mainly due to government subsidies and VAT credits. 24H1's net profit margin was 18.1%, an increase of 1.6 pct over the previous year. Furthermore, a slight decrease in the management fee ratio (equity incentive costs decreased year on year) and an increase in interest income also contributed to an increase in net interest rates.

Vietnam's production capacity is progressing steadily, the internationalization strategy has entered a harvest period, and the company's growth has entered a new stage. In recent years, the company has continued to promote the global production capacity layout and the development of brand customers in the international market. Following the commissioning of the previous industrial park in Bangladesh, the Vietnam Industrial Park was also initially put into operation in the first half of this year, and will gradually climb the slope in the future. In addition to improving the stability of the supply chain, the layout of overseas production capacity is to provide factory inspection and order acceptance for overseas brand customers. Coupled with the company's continuous marketing expansion in the European market in recent years, we believe that the company's global development has entered a new stage of growth. The company's outstanding advantages over peers include personalized and stylish products, fast delivery and perfect customer service. We are optimistic that the company will continue to replace YKK's market share in industry competition in the future and the continuous growth space brought by it.

According to the semi-annual report, we adjusted our profit forecast (revenue, gross margin, and other income, and lowered the expense ratio). We expect the company's 2024-2026 earnings per share to be 0.6, 0.7, and 0.8 yuan (previously 0.56, 0.65, and 0.76 yuan), respectively, and the target price corresponding to the DCF valuation is 17.94 yuan, maintaining a “buy” rating.

Risk warning: Domestic and foreign economic recovery is lower than expected, international trade frictions, and overseas production capacity climbing lower than expected.