The company's 1H2024 revenue increased 0.46% year on year, and net profit to mother increased 16.47% year on August 22. On August 22, the company announced its 2024 semi-annual report: 1H2024 achieved operating income of 3.654 billion yuan, up 0.46% year on year, and realized net profit of 0.014 billion yuan, converted into fully diluted EPS of 0.09 yuan, an increase of 16.47% year on year, and realized net profit without return to mother of 0.006 billion yuan, an increase of 4.34% year on year.

Looking at the single-quarter split, 2Q2024 achieved operating income of 1.71 billion yuan, a year-on-year increase of 0.75%, and achieved net profit of 0.001 billion yuan, converted into fully diluted EPS of 0.01 yuan, a year-on-year decrease of 69.06%, and realized net profit without return to mother of 0.001 billion yuan, or -0.002 billion yuan in the same period last year, turning a loss into a profit.

The company's 1H2024 comprehensive gross margin decreased by 6.00 percentage points, the expense ratio decreased by 6.16 percentage points during the period, and the consolidated gross margin of the 1H2024 company was 37.55%, down 6.00 percentage points from the previous year. Looking at the single-quarter split, 2Q2024's comprehensive gross margin was 37.63%, down 8.47 percentage points from the previous year.

The 1H2024 company's expense ratio for the period was 30.52%, down 6.16 percentage points year on year. Among them, sales/management/finance expense ratios were 10.66%/14.06%/5.80%, respectively, with year-on-year changes of +2.44/ -8.17/ -0.43 percentage points, respectively. The 2Q2024 company's expense ratio for the period was 30.06%, down 8.77 percentage points year on year. Among them, the sales/management/finance expense ratio was 11.21%/13.04%/5.81%, respectively, with a year-on-year change of +2.17/ -10.70/ -0.23 percentage points, respectively.

Revenue from the Buy100 business also increased by 7.09%, exploring innovative new marketing methods. 1H2024 Company opened a new supermarket chain in Jilin Province. By business type, 1H2024's shopping center (department store) business had the highest year-on-year revenue growth rate of 7.09%, followed by the supermarket chain business, with a revenue growth rate of 3.44% year-on-year. 1H2024's real estate business revenue fell 93.12% year on year, mainly due to a significant decline in revenue from its subsidiary Siping Real Estate. The decline in 1H2024's gross margin was mainly due to the adjustment of fixed asset depreciation accounts according to the area occupied by the company's business model.

1H2024 explores innovative marketing methods, launches marketing activities such as auto shows, e-sports, etc., and creates a series of themed business scenarios such as Eurasian Golden Street, Eurasian Wine Shop, Eurasian Granary, Children's Clothing Trends, Unpowered Family Park, and Hanfu Parade.

Maintain profit forecasts and maintain “buy” ratings

The company's performance is basically in line with our previous expectations. We maintain our 2024/2025/2026 EPS forecast of 0.14/0.15/0.16 yuan. The company has a strong competitive position in Changchun and other places, innovates and seeks change in marketing activities, continuously promotes refined management, and maintains a “buy” rating.

Risk warning: Regional economic growth falls short of expectations, and the operating conditions of major European and Asian stores have fallen short of expectations.