Incident Overview

2024H1 The company's revenue/net profit attributable to mothers/net profit after deducting impairment was 4.80/0.092/0.06/0.023 billion yuan respectively, down 8.30%/4.11%/11.89%/10.20% year on year. The decline in revenue was mainly driven by online controlled discounts. The decline was mainly driven by government subsidies (24H1 was 0.03 billion yuan, up 44% year over year). The net profit after deducting the effects of impairment was 0.075 billion yuan, down 6% year over year. The lower operating cash flow than net profit attributable to mother was mainly due to a decrease in accounts payable.

The 2024Q2 company's revenue/net profit attributable to mothers/net profit after deduction was 0.193/0.039/0.016 billion yuan, respectively, up -16.13%/22.97%/-35.40% year over year. The increase in Q2 net profit was mainly due to a sharp increase in other earnings (23/24Q2 was 0.002/0.026 billion yuan), that is, the growth of corporate support funds, which were mainly distributed in Q1 last year, and this year they were mainly distributed in Q2.

On 24/7/25, the company issued a pre-disclosure notice on shareholders' holdings reduction. The shareholders “Shenzhen Jiaqiao” and “Tianjin Jiaqiao” held 3.49/1.91 million shares respectively, with a shareholding ratio of 3.23%/1.77%. They were all issued before the IPO, and are expected to reduce their holdings by no more than 2.16 million shares.

Analytical judgment:

The online decline is due to increased control over discounts, and 57 new retail stores have been opened. (1) By channel, 24H1 offline direct operation/franchise/online was 0.131/0.054/0.28 billion yuan respectively, up 0.09%/8.57%/-18.35% year on year; online revenue accounted for 60.18%, down 5.3 PCT year on year, mainly because the company began controlling discounts in the first half of the year to maintain brand power, and online channels were more sensitive to discounts and prices. The number of 24H1 direct-operated/franchise stores was 183/394, with a net opening of 18/20, an increase of 11%/5% year-on-year. It is estimated that the half-year direct-operation/single-store shipment (0.72/0.14 million yuan) increased -10%/3% year over year, the single store area was 83.09/66.83 square meters, up 39.15%/18.52% year on year, and the half-year direct operation/franchise efficiency was 0.0086/0.002 million yuan/㎡, a decrease of 35%/13% year on year. 24H1 has a total of 111 direct-run stores that have been in operation for more than 12 months, contributing an average of 0.7105 million yuan, an increase of 9.66% over the previous year.

63 new direct-run stores have been opened, including 4 for children, 57 for leisure, and 2 for Bebelux, with an average area of 116 square meters. Online channels, the revenue of platforms 1, 2, 3, and 4 was 1.23/0.071/0.06/0.016 billion yuan, respectively, with return rates of 49.80%/34.51%/39.80%/25.49%, respectively. The top four platforms accounted for 96% of revenue. (2) By region, excluding e-commerce revenue, the 24H1 Northeast China/North China/East China/Northwest/Southwest/Central South China revenue was 0.11/0.95/0.01/0.006/0.01 billion yuan respectively, up 3.07%/-1.10%/5.93%/0.55%/-7.96%/32.61% year-on-year. The sales revenue in the central and southern regions was the largest but relatively low. The revenue in North China, the company's main sales area, declined slightly.

The Idle Master license fee and adult costume contributions are beginning to be reflected. 1) The 24H1 license fee revenue was 0.015 billion yuan, with a gross profit margin of 32.24%; 2) The subsidiary Jibus (Beijing) Brand Management Co., Ltd. is the sales company and is mainly responsible for the management of the brand and the foreign sales of the adult clothing category. The revenue/net profit for the first half of the year was 0.007/0.001 billion yuan, with a net interest rate of 13%; the amortization of intangible assets was 6.05 million yuan.

Online gross margin increased due to controlled discounts, and the decline in deducted non-net interest rates was mainly due to the increase in sales and management expense ratios and the increase in the share of credit+asset impairment losses. (1) 24H's gross margin was 62.68%, up 1.37PCT year on year: 24H's gross margin of online/direct management/ franchise was 65.52%/63.29%/54.92% respectively, up 3.12/2.23/0.49PCT year on year. The gross margin growth was mainly due to increased self-control discounts. The net interest rate/deducted non-net interest rate for 24H1 company was 19.23%/12.58%, respectively, up 0.84/-0.51 PCT over the previous year. Looking at the cost ratio, the 24H sales/management/finance expense ratio was 33.89%/9.06%/-0.53%, respectively, with a year-on-year increase of 0.22/1.42/-0.21PCT. The increase in management expenses ratio was mainly due to an increase in employee remuneration and depreciation and amortization (6.05 million, up 31% year over year). The share of other income increased by 2.31 PCT to 6.38%, mainly due to the year-on-year increase of 44.34% to 0.03 billion yuan in corporate support funds; the share of net income from changes in fair value decreased by 0.49 PCT to 2.11%; the share of asset impairment losses increased by 0.51 PCT; the share of credit impairment losses increased by 0.33 PCT; the share of non-operating expenses decreased by 0.24 PCT year on year; income tax/revenue increased by 0.22 PCT to 6.31% year on year. (2) 24Q2 gross margin/net profit margin/net deducted non-net interest rate were 62.77%/20.34%/8.07%, respectively, up 1.60/6.47/ -2.41PCT over the previous year. Our analysis was mainly due to the increase in Q2 corporate support funds. 24Q2 sales/management/ finance expense ratio was 35.40%/11.86%/-0.62%, up -0.13/3.08/-0.33PCT; the share of other income increased by 12.65 PCT; the share of net income from investment decreased by 0.70 PCT; the share of net income from changes in fair value decreased by 0.50 PCT; net income from non-operating income increased by 0.31 PCT; the share of asset impairment losses increased by 1.48 PCT; the share of credit impairment losses increased by 0.80 PCT; the share of income tax/revenue Increased by 1.99 PCT.

Inventories have increased, and the number of turnaround days has increased. 24H1's inventory was 0.405 billion yuan, an increase of 2.69% over the previous year. Among them, inventory goods/shipped goods/commissioned processing materials/low-value consumables accounted for 97%/2%/1%/0%, respectively. The number of inventory turnover days was 416 days, an increase of 41 days over the previous year, mainly due to the company's operation in the first half of the year. At the same time, the increase in inventory turnover days was also affected by the company's ability to maintain brand assets and control product discounts; accounts receivable were 0.021 billion yuan, down 2.84% year on year; accounts receivable turnover was 11 days, up 1 day year on year; accounts payable was 0.121 billion yuan, up 33.46% year on year, and the number of accounts payable turnover days was 136 days, down 2 days year on year.

Investment advice

We analyzed that (1) the main business was dragged down by online, but the order amount was 0.126 billion yuan, an increase of 36%, and there is still room for offline stores. We expect that with only 2 authorized brands, there is still room for 500-600 single brand stores for middle and high-end brands, and there is still room to double in the future; in the future, as the single store area expands, the connection rate and repurchase rate increase, there is still room for improvement in store efficiency; (2) The company's acquisition of leisure in September 23 will help form a second growth curve in the long run, which is expected to lead to a second growth curve. thick ; (3) The company began strict control of discounts in the first half of the year to enhance its brand power, which is expected to drive a further increase in gross margin. Considering the impact of low consumer confidence on online traffic and offline traffic, the 24-26 revenue forecast was lowered by 1.474/1.844/2.045 billion yuan to 1.285/1.548/1.704 billion yuan; net profit to mother for 24-26 was reduced by 0.23/0.287/0.33 billion yuan to 0.207/0.26/0.292 billion yuan; corresponding to a 24-26 EPS reduction of 2.13/2.66/3.06 yuan to 1.91/ 2.41/2.70 yuan, the closing price of 17.51 yuan on August 28, 2024 corresponds to the 24/25/26 PE of 9/7/6 times, maintaining the “buy” rating.

Risk warning

Risk of reducing Xiaofei's holdings, risk of merger and acquisition integration falling short of expectations, risk of opening a store falling short of expectations, and systemic risk.