Incident: Huitongda Network 24H1 achieved revenue of 32.86 billion yuan, yoy -24.3%; net profit to mother of 0.13 billion yuan, yoy -49.0%, net profit margin of 0.4%.

Actively seek change to cope with the pressure on transaction business revenue, and cost control capabilities have been further improved. The company's 2024H1 trading business segment generated revenue of 32.385 billion yuan, yoy -24.7%, mainly due to increased competition in the industry, which caused leading brands in the consumer electronics industry to implement active price reduction strategies, sharp drops in the price of raw materials for agricultural production, the company's active contraction of the affected business, and the group actively adjusted the second-level categories and brand layout of the home appliance industry, which affected the revenue of companies in the transition period. The service business segment achieved revenue of 0.38 billion yuan, yoy +12.0%, of which the store SaaS+ subscription business revenue YoY +13.6%. The main reason is that the company further promotes the upgrading of the SaaS product user experience and enhances customer service capabilities and member retail store stickiness. The company actively sought changes. In the first half of the year, it continued to adjust and optimize the second-level category structure of various industries based on customer needs, deepened brand cooperation and increased supply chain cooperation, and jointly promoted an increase in overall gross margin. The gross margin of 2024H1 reached 3.5%, an increase of 0.5 pcts over the previous year.

Supply chain capabilities are steadily improving, and the level of brand cooperation continues to deepen. 24H1 continues to expand new leading brand cooperation, while actively expanding high-quality resource-based enterprise cooperation and regional retail enterprise cooperation, comprehensively upgrading the supply chain resource system, and effectively broadening downstream channels. Deepen ongoing cooperation with well-known brands such as Apple, Midea, Gree, Oaks, BYD, Nacha and Unilever, and add cooperation with brands such as Siemens, CGZ and SAIC Motor Group. Breakthroughs have been achieved in building its own brand and integrating production and marketing: mass production of air conditioners under its own brand “Altisa”, surpassed 0.016 million units in two weeks of launch, and the launch of the “acetamidophos” integrated production and marketing project. Expand the high-margin circuit: Actively expand high-margin products such as home cleaning, personal care, and beauty, and lay out photovoltaic tracks to further enhance the company's gross profit level.

Investment advice: The company is expected to achieve revenue of 88.12/93.895/100.164 billion yuan in 24/25/26, respectively, and net profit to mother of 0.554/0.718/0.915 billion yuan, yoy +23.6%/27.5%, respectively. Currently, the company is in the process of strategic adjustment and active optimization of the business structure. It is optimistic about the company's business prospects in the sinking market and is given a “gain” rating.

Risk warning: industry competition intensifies; terminal consumer demand falls short of expectations, etc.