The engineering channel business shrinks, and revenue performance continues to be under pressure
The company released its 24-year semi-annual report. 24H1 achieved operating income of 2.335 billion yuan, a year-on-year net profit of 0.083 billion yuan, a year-on-year net profit of -49.77%, net profit not to mother of 0.069 billion yuan, or -58.68% year-on-year. 24Q2 revenue and net profit to mother were 1.516 and 0.073 billion yuan respectively, respectively, in line with expectations of previously disclosed performance forecasts. Due to the overall weak demand for ceramic tiles, and the company voluntarily abandons some engineering orders with long billing periods, high collection risks, and low gross profit levels, revenue and profits are under pressure. In the medium to long term, the company's channel structure continues to be optimized, and the distribution share is steadily increasing. We believe there is still room for improvement in profitability and cash flow.
The channel structure continues to be optimized, and the share of distribution is steadily increasing
By business, 24H1's revenue for porcelain glazed tiles, non-porcelain glazed tiles, ceramic panels and thin ceramic tiles was 1.86, 0.14, and 0.26 billion yuan, respectively, -16.2%, -54.8%, and -18.1% year-on-year; gross margins were 26.9%, 19.9%, and 34.6%, respectively, -2.1, +0.5, and +6.8pct year-on-year, respectively; from the perspective of raw materials, the market prices of liquefied natural gas and corrugated paper we tracked at 24Q3 were +15.3% and -5.5% year-on-year respectively, entering the third quarter Since then, natural gas prices have rebounded, which may have had a certain impact on gross margins.
By channel, 24H1's distribution and engineering strategy channel revenue was 1.77 and 0.57 billion yuan respectively, -4.3% and -46.6% year-on-year respectively. The share of distribution channel revenue increased by 12.3 pct to 75.6% year on year, and the channel structure was gradually optimized. By the end of 24H1, the company's mortgage debt was 0.31 billion yuan, and the total amount of notes receivable plus accounts receivable was 1.024 billion yuan. The cumulative accrued credit impairment losses from 21 to 24H1 accounted for 97.8% of accounts receivable at the end of 24H1. As the share of engineering channel revenue declined, we determined that subsequent impairment exposure is expected to gradually shrink.
There is still room for optimization of expense ratios, and cash flow has improved significantly
24H1's comprehensive gross margin was 26.8%, -1.09pct year on year, and the cost ratio for the period was 21.27%, +2.43pct year on year. Among them, sales, management, R&D, and financial expenses ratios were -0.39, +2.14, +0.34, and +0.35 pct year over year, respectively. Costs were not effectively diluted due to the decline in revenue. 24H1's total asset and credit impairment losses were -0.007 billion yuan, a year-on-year decrease of 0.021 billion yuan. The net interest rate under comprehensive influence was 3.48%, -2.86pct year on year. In terms of cash flow, the net CFO of 24H1 was 0.376 billion yuan, with a year-on-year increase of 0.207 billion yuan, an increase of 0.207 billion yuan, an improvement.
Continue to be optimistic about medium- to long-term growth and maintain an “gain” rating
We judge that the current company's impairment calculation may be sufficient. Considering that weak demand for ceramic tiles has put some pressure on the company's performance growth since 24, we lowered the company's 24-26 net profit forecast to 0.26, 0.34, and 0.43 billion yuan (previous values were 0.36, 0.43, 0.52 billion yuan). In the medium to long term, we believe that Mona Lisa, as the leading ceramic tile company, will still have a lot of room for improvement in the company's market share and maintain the “gain” rating.
Risk warning: Price reductions for fiercely competitive products exceeded expectations, downstream real estate repayments fell short of expectations, raw materials rose more than expected, and C-side expansion fell short of expectations.