Description of the event
Xianle Health announced its 2024 mid-year report. In 2024H1, the company achieved total operating income of 1.99 billion yuan (+28.85%); net profit to mother of 0.154 billion yuan (+52.66% year over year), after deducting non-net profit of 0.154 billion yuan (+55.48% year over year). In 2024Q2, the company achieved total operating income of 1.039 billion yuan (+23.29% YoY); net profit to mother of 91.4436 million yuan (YoY +27.38%), after deducting non-net profit of 89.537 million yuan (+21.18% YoY).
Incident comments
The Chinese business bucked the trend, and BF's quarterly optimization trend was remarkable. By region, 2024H1 achieved revenue of 0.832 billion yuan (YoY +4.22%); America 0.729 billion yuan (YoY +65.42%); Europe 0.295 billion yuan (YoY +13.78%); and other regions 0.136 billion yuan (+185.71% YoY). The Chinese business continued to achieve healthy growth in the same period last year against the backdrop of the impact of the high demand base for health products and channel restructuring. At the same time, the relatively rapid year-on-year increase in revenue in the US is expected to be affected by the restoration of market sentiment and the expansion of new companies. The European region is generally improving steadily. It is expected that new dosage forms such as gummies will be promoted and customers will expand in an orderly manner. In other regions, cooperation with leading Australian customers has been further strengthened, and the Southeast Asian market is actively expanding.
The advantages of scale have been further strengthened, and the core dosage forms have outstanding performance. Looking at dosage forms, the company achieved revenue of 0.889 billion yuan in the first half of the year for softgels (+26.80%); 0.142 billion yuan for tablets (-17.50%); 0.142 billion yuan for powders (+13.29%); 0.486 billion yuan for gummies (+60.55%); 0.14 billion yuan for beverages (-14.36%); hard capsules of 0.098 billion yuan (YoY +70.16%); other dosage forms 0.08 billion yuan (+ 315.23% YoY) The company achieved a high increase in revenue from the top two major dosage forms of softgels and gummies. At the same time, the company's 2024H1 gross margin was +2.59pct to 32.05% year-on-year, and the scale advantage of dosage forms such as softgels, gummies, and powders increased further.
Sales expenses were invested in a single quarter, and the management expense ratio was optimized to a certain extent. The company's 2024H1 net interest rate increased 1.21pct to 7.76% year over year, including sales expense ratio (+0.43 pct year over year), management expense ratio (year over year -0.78 pct), R&D expenses rate (+0.37 pct year over year), financial expenses ratio (+0.71 pct year over year), sales tax and surcharges (+0.06 pct year over year).
The increase in sales expenses is expected mainly due to the company's promotion of sales integration between China and the US and strengthening market promotion in Europe and the Asia-Pacific region.
The company and employees are willing to share the company's growth, and they are optimistic about medium- to long-term development trends. In 2023, the company introduced equity incentives and employee stock ownership plans to further strengthen the binding of core employees (including overseas business personnel). Driven by high target expectations and endogenous outreach strategies, the company is expected to continue to achieve rapid growth. The company's net profit for 2024/2025/2026 is expected to reach 0.394/0.477/0.57 billion yuan, respectively, and PE corresponding to the current stock price is 15/12/10 times, respectively, maintaining the “recommended” rating.
Risk warning
1. The risk of slow recovery in demand;
2. Industry competition further exacerbates risks;
3. Risk of changes in consumer consumption habits.