24H1 revenue/net profit to mother was -19.8%/-49.8%, maintaining “buying” Mona Lisa's semi-annual report. 24H1 achieved revenue of 2.335 billion yuan (yoy -19.78%) and net profit of 82.6021 million yuan (yoy -49.77%). Among them, Q2 achieved revenue of 1.516 billion yuan (yoy -16.16%, qoq +85.35%) and net profit to mother of 72.9671 million yuan (yoy -53.69%, qoq +657.31%).

Considering the impact of industry price competition on the company's gross margin, the company's 2024-2026 EPS forecast value was lowered to 0.51/0.87/1.26 yuan (previous value 1.01/1.15/1.30 yuan). Comparatively, the company's 24 wind agreed to expect the average PE value to be 16 times. Previously, the company contracted revenue from strategic engineering channels. Considering that the channel had been narrowed to a certain scale, the company's overall inventory structure continued to be optimized, and more measures were taken to promote repayment. The company was given 20 times PE in 24 years, with a target price of 10.14 yuan (previous value of 12.12 yuan) to maintain “purchase.”

24H1 prices affected the overall gross margin, and the rapid transformation of the channel 24H1 achieved revenue of 1.859/0.138/0.262 billion yuan for porcelain glazed tiles/non-porcelain glazed tiles/ceramic tiles, respectively, -16.17%/-54.81%/-18.05%; gross margins were 26.88%/19.88%/34.60%, respectively, -2.11/+0.49/+6.80pct; 24H1 comprehensive gross margin was 26.83%, -1.09pct year on year, Or mainly due to fierce price competition; 24Q2 gross profit margin was 27.0%, -3.0/+0.49pct month-on-month. By channel, 24H1 distribution/strategic engineering channel revenue was 1.766/0.569 billion yuan respectively, -4.26%/-46.64% year-on-year. The company actively reduced real estate customer orders with high liquidity risk, accounting for 75.6% of the distribution business, +12.3 pct year on year, and the channel was rapidly transformed.

24H1 Good control of sales expenses, positive net operating cash flow

The cost rate for the 24H1 period was 21.27%, +2.43pct year on year, of which the sales/management/R&D/finance expense ratio was 6.23%/9.52%/3.74%/1.78%, -0.39pct/+2.14pct/+0.35pct. The absolute value of sales expenses decreased 24.52% year over year, and fine control continued to be promoted. The remaining expenses were affected by the decline in revenue, the dilution effect was weakened, and the rate increased year-on-year; 18.85%/month-on-month 6.92pct The company's balance ratio/interest-bearing debt ratio at the end of 24H1 was 58.37%/30.04%, -4.0/-0.85pct year-on-year, mainly due to the company's repayment of some bank loans. 24H1's net operating cash flow was 0.376 billion yuan, +123.25% year over year, 24H1's payment/payout ratio was 109.5%/94.2%, +8.7/-9.4pct year on year, mainly because the company strengthened collaborative production and marketing management, reduced procurement costs, and promoted receivables.

Adhere to channel transformation and move forward in a stable and far-reaching market with light weight

According to Aowei Cloud Network, the retail sales volume of construction and decoration materials companies above the January-July limit was 0.302 million yuan, or -19.2%; according to the National Bureau of Statistics, retail sales of construction and decoration materials companies above the January-July limit were 91.1 billion yuan, -1.3%. The growth rate was -0.1 pct compared to January-June, and the decline on the retail side was still less than on the engineering side. We believe that the company adheres to channel transformation, that financial indicators such as operating cash flow have improved markedly after the strategic engineering business has shrunk, and that after the risk of bad debt accrual is gradually released, the company is expected to move forward lightly and steadily.

Risk warning: The cost of raw materials and energy has risen sharply, increasing competition in the industry has led to a decline in gross margin, and the risk of depreciation of accounts receivable.