Event: The company publishes its 2024 semi-annual report. The company achieved operating income of 4.387 billion yuan in 2024H1, +1.60% year-on-year; realized net profit of 0.175 billion yuan, or -29.04% year-on-year. Net profit after deducting non-return to mother was 0.211 billion yuan, -6.56% YoY. Looking at a single quarter, 2024Q2 achieved revenue of 2.321 billion yuan, -4.29% year over year; net profit to mother 0.045 billion yuan, -63.88% year over year; net profit after deducting non-return to mother 0.086 billion yuan, or -21.34% year over year.

Food processing machines & nutritional cookers performed well, and domestic sales performance was superior to export sales. 1) By product:

24H1 food processing machine/ nutrition cooker/ Western-style appliances/ cookware achieved revenue of 14.25/1.842/0.847/0.141 billion yuan respectively, +13.57%/+4.68%/-9.96%/-25.74% year-on-year. Among them, the gross margin of food processing machines/ nutritional cookers/ Western-style appliances was +0.04pct/+0.37pct/+0.55pct year-on-year to 35.07%/21.44%/28.67%. 2) Subregions: 24H1 domestic and foreign businesses achieved revenue of 3.555/0.832 billion yuan respectively, +4.66%/-9.69% year-on-year. Gross margin was +1.49pct/-3.81pct YoY to 33.15%/6.40%.

Gross margin has been optimized, sales expenses are still under high pressure, and profit levels have declined. Gross profit margin:

24H1/24Q2 +0.99pct/+2.64pct to 28.07%/29.10% year over year. Rate side:

24H1 Sales/Management/R&D/Finance Rate YoY +2.01pct/-0.07pct/+0.28pct/ -0.38pct to 16.38%/3.77%/4.26%/-1.35%; 24Q2 Sales/Management/R&D/ Finance Rate YoY +3.36pct/-0.37pct/+0.66pct/-0.21pct to 19.18%/3.28%/4.26%/-1.56%. Net interest rate: Overall, the company's 24h1/24q2 net margin was -1.81 pct/-3.37 pct year-on-year to 3.94%/1.82%.

Profit forecasting and investment advice. We expect the company's net profit to be 0.403/0.448/0.491 billion yuan in 2024-2026, respectively, +3.5%/+11.3%/+9.6% year-on-year, maintaining a “buy” rating.

Risk warning: Consumption recovery falls short of expectations, industry competition intensifies, and channel development falls short of expectations.