Company Releases 2024 Interim Report

24Q2 revenue was 2.155 billion, up 24.3%; net profit to mother was 0.152 billion, down 19.4%; net profit after deducting non-return to mother was 0.11 billion, down 7.7%; 24H1 revenue was 3.99 billion, up 23.9%, which represented a 23.8% increase in sales; net profit attributable to mother 0.23 billion, a decrease of 14.8%; net profit attributable to mother was 0.11 billion yuan, down 46.7%.

In 2024, the global economy is still facing multiple challenges such as geopolitical conflicts, depreciation of many countries' currencies, and increased trade protectionism. With its advantages in production capacity layout and the ability to respond quickly in sales and production, Blum has firmly grasped the current favorable opportunity where downstream clothing brands are ending their inventory and consumer demand is recovering. The company closely follows the market response and adjusts the product structure in a timely manner to meet rapidly changing market needs with the best product quality and the fastest product delivery.

By product, 24H1 yarn revenue was 3.67 billion yuan, an increase of 22% over the same period, accounting for 92.0%.

By region, 24H1's domestic revenue was 1 billion, an increase of 14%, accounting for 24.9%; overseas revenue was 2.99 billion yuan, an increase of 27.4%, accounting for 75.1%.

24H1 gross profit margin 10.0%, same decrease of 4.9pct; of these, yarn gross profit margin was 9.2%, same decrease of 4.7pct; in terms of cost ratio, sales rate 0.6%, same reduction of 0.04pct; management rate 4.0%, same decrease of 1.8pct; financial rate 1.5%, same increase of 1.1 pct, mainly due to the year-on-year decrease in net exchange income for the current period; R&D rate 1.5%, same increase of 0.1 pct;

The company's 24H1 net profit margin was 5.8%, down 2.6 pct.

The company's wholly-owned subsidiary 24H1 in Vietnam had revenue of 3.09 billion yuan, up 27.4%, accounting for 77.4% (23H1 was 75.3%); net profit was 0.22 billion, up 33.7%; and net profit margin was 7.1%, up 0.3 pct.

Focus on new product development and keep up with market trends

The company focuses on innovating and developing a series of environmentally friendly color spinning products such as ecological cotton, recycled cellulose fiber, and biodegradable fiber. After launch, the market response was enthusiastic. At the same time, it closely followed market trends, developed new products combined with environmental protection and different styles of color spinning, and released 2025/26 spring, summer, autumn and winter popular color cards in advance to provide more inspiration for brand designer development.

Global layout, leveraging production capacity advantages and economies of scale

The company is headquartered in Ningbo, Zhejiang, and has established an overseas production base in Vietnam's Xining Province. The continuous optimization of the industrial layout has built up momentum for the sustainable development of the company. As of 24H1, the company's overseas assets reached 8.23 billion, accounting for 55.1% of total assets, and 77% of production capacity was located in Vietnam. The company has accumulated many years of operating experience in the textile field, and can make timely predictions on the new development situation of the textile industry at home and abroad, making the company leading the industry in terms of capacity layout and product innovation.

Adjust profit forecast to “hold” rating

Based on the 24H1 financial report, the company's gross margin was drastically reduced and global uncertainty; we adjusted the profit forecast and estimated that the return for 24-26 would be 0.5 billion, 0.6 billion, and 0.72 billion yuan (the original value for 24-25 was 1.5 and 1.69 billion yuan), respectively, and PE was 13X, 11X, and 9X, respectively.

Risk warning: market competition risk; risk of fluctuations in raw materials, energy and labor costs; foreign exchange policy risk; overseas business risk, etc.