2024H1 achieved revenue of 7.76 billion yuan/yoy +25.0%, mainly due to the average number of stores at the group level yoy +18.8% and same-store sales yoy +7%. The adjusted net profit was 1.24 billion yuan/ +17.8%, and the adjusted net profit margin was 16.0% /-1.0pct. The adjusted net profit margin for the quarter excluding net exchange profit and loss was 16.2% /-0.1 pct.
2024Q2 achieved revenue of 4.04 billion yuan/ +24.1%. The adjusted net profit margin was 0.63 billion yuan/ +9.4%, the adjusted net profit margin was 15.5% /-2.1pct, and the adjusted net profit margin for the quarter excluding net exchange profit and loss was 15.6% /+0.1pct.
Revenue splitting:
24H1 Mainland China's revenue was 5.03 billion yuan/yoy +17.2%, of which 1) the revenue of Mingchuang Premium's offline stores in mainland China was +16.5%, mainly due to the average number of stores yoy +16.0%, the same store sales of 98.3% of last year's level, and 2) TOP TOY's revenue yoy +37.9%, mainly due to Yoy +13.6% of same-store sales and rapid growth in the average number of stores.
24H1 overseas market revenue is 2.73 billion yuan/yoy +42.6%, mainly due to the average number of stores yoy +21.8%, and same-store sales YOY +16.3%. As of 24H1, revenue from overseas markets accounted for 35.2% of total revenue (30.9% for the same period in 2023).
Store expansion: 1) As of 24H1, the number of Mingchuang Premium stores was 6868, and H1 had a net opening of 455 stores; including 4115 stores in mainland China, 189 new H1 stores, 2,753 overseas stores, and 266 new H1 stores. 2) As of 24H1, the number of TOP TOY stores was 195, with a net opening of 47 new stores on H1.
Profit side details:
1) The gross margin of 24H1 was 43.7% /yoy+4.1pct. The increase was mainly due to the increase in the direct sales market's revenue contribution of 10 pct to 55.7% in overseas markets. The increase in gross margin in the mainland China market was driven by newly launched products contributing higher gross margin, and the gross margin of TOPTOY increased due to the shift of the product portfolio to a more profitable product.
2) The 24H1 sales and distribution expenditure ratio is 19.6% /yoy+4.8pct. The main reason for the year-on-year increase was the company's investment in direct stores in mainland China and overseas markets.
3) The 24H1 general and administrative expenditure rate was 5.4% /yoy+0.2pct. The year-on-year increase was mainly due to the increase in personnel related expenses.
The board of directors has approved a cash dividend for the first half of 2024, amounting to approximately RMB 0.621 billion.
After paying an interim dividend, the company will return approximately RMB 1.4 billion in cash to shareholders through dividends and share repurchases from this year to now.
Investment advice: In the future, the company will continue to participate in global competition from the two dimensions of cost leadership and product differentiation, always adhering to the basic cost performance market, while actively experimenting with the super store strategy, lock in “big beauty,” “big toys,” and “big IP”, build a strong brand image and super category, and further enhance the GMV of a single store.
We expect the company to achieve adjusted net profit of 2.8/3.4/4 billion yuan in 24/25/26, corresponding to 14/11/9xPE, maintaining a “buy” rating.
Risk warning: overseas business risks, store expansion falls short of expectations, macroeconomic risks, etc.