The company released its 2024 semi-annual report: in the first half of 2024, the company achieved operating income of 3.721 billion yuan, a year-on-year increase of 40.74%; net profit to mother 0.172 billion yuan, -7.73% year-on-year; net profit after deduction of 0.16 billion yuan to mother, or -24.97% year-on-year. 2024Q2 achieved operating income of 1.879 billion yuan, +36.55% year over year; net profit to mother of 71 million yuan, -27.94% year over year; net profit after deduction of 63.57 million yuan to mother, or -50.40% year over year.

The company's revenue has achieved rapid growth, and the contribution of new and sub-new products is outstanding. In the first half of 2024, the company's furniture/home/pet series achieved revenue of 1.896/1.335/0.309 billion yuan respectively, up 39.42%/50.21%/37.31% year-on-year; mainly due to the company's increased efforts to launch new products, while sales of new products (sub-new products) entered the market in 2023 achieved rapid growth, effectively driving the rapid growth of main business revenue. However, due to factors such as disruptions in the shipping cycle, delays in delivery, and poor climatic conditions during the peak sales season in Europe, the growth rate of 2024H1's outdoor sports products slowed by 3.44%, accounting for 3.62% of total revenue.

The balanced development of multiple regions has achieved high revenue growth. 2024H1 achieved revenue of 2.279 billion yuan/1.341 billion/ 29.82 million yuan in Europe/North America/Japan respectively, +41.22%/+41.12%/+30.56%, respectively. The company has maintained a relatively strong competitive advantage in the European market and obtained strong revenue growth through the expansion of platforms such as OTTO and Shein; in addition, the company is strengthening the launch of new products in the US market, developing new platforms such as Temu, Target, and Tik Tok Shop, and laying out tripartite cooperative warehouses in the East, the US, China, and the US and South to improve the market competitiveness of products.

Profitability has fluctuated. 2024H1's net profit margin to mother was 4.61%, -2.42pct year on year; gross profit margin was 34.92%, -1.47pct year on year. Mainly affected by the company's market share seizure, the year-on-year decline in the average product unit price, and the increase in marketing and promotion expenses for new products; at the same time, the Red Sea incident led to a year-on-year increase in shipping costs. According to data released by the Shanghai Shipping Exchange in the first half of 2024, the average freight rate of exports from Shanghai Port to basic European ports and basic ports in the US and West increased by 224.61% and 188.58% compared to the average freight rate in 2023; facing a high base of 2023H1 exchange profit and loss of 17.726 million yuan 2024H1 Profit and loss of 6.5968 million yuan; in addition, 2024H1 added an equity incentive payment fee of 7.2477 million yuan.

Profit forecast and rating: We expect the company's net profit to be 0.424, 0.568, and 0.709 billion yuan respectively, up 2.6%, 34.0%, and 24.7% year-on-year. The current closing price corresponds to the 24-25 PE is 16.11 and 12.02 times. As a leading cross-border e-commerce enterprise for home and furniture, the company gives the company a 23 to 24 times PE valuation in 2024, corresponding to a reasonable value range of 24.28 to 25.33 yuan, corresponding to 1.21 in 2024 1.26 times the PS valuation, giving it a “better than the market” rating.

Risk warning: International trade frictions have intensified, shipping prices have fallen short of expectations, and market demand fluctuates.