Incident: Mingchuang Premium released its 2024H1 semi-annual report. 2024Q2 achieved revenue of 4.035 billion yuan, yoy +24.1%; domestic revenue of 2.525 billion yuan, yoy +18.1%; overseas revenue of 1.51 billion yuan, yoy +35.5%; adjusted net profit of 0.625 billion yuan, yoy +9.4%, adjusted net profit margin of 15.5%, a year-on-year decrease of 2.1 pct.
High-quality and sustainable management, and gross margin reached a new high. The company achieved revenue of 7.76 billion yuan, yoy +25.0% for the six months ended June 30, 2024; overall revenue growth was mainly due to an 18.8% year-on-year increase in the average number of stores at the group level and an increase of about 7% in same-store sales. 24H1 gross profit of 3.39 billion yuan, gross margin reached 43.7%, a year-on-year increase of 4.1 pct, another record high; adjusted net profit of 1.24 billion yuan, yoy +17.8%, and the adjusted net profit margin reached 16.0%. The increase in gross margin is mainly due to the continuous increase in the revenue contribution of the direct sales market in overseas markets. The company implemented the IP strategy and Mingchuang Premium brand upgrade strategy at home, contributed to a higher gross margin ratio and contributed to the overall increase in gross margin of the mainland China market, as well as the shift of TOP TOY's product portfolio to more profitable products, which jointly promoted the Group's overall gross margin growth.
Domestic level: Seizing structural opportunities, the same stores are gradually recovering. The number of domestic stores in 24H1 was 4,115, a net increase of 189. Among them, first-tier and second-tier stores were even stronger, accounting for more than 50% of the net increase.
The revenue growth of Mingchuang's offline stores in mainland China was a 16.0% year-on-year increase in the average number of stores, and same-store sales were 98.3% in the same period last year. Furthermore, TOP TOY's revenue increased by 37.9%, and its same-store sales grew strongly by 13.6%, while the average number of stores also grew rapidly.
Overseas level: The growth rate of store expansion continues, and same-store growth is strong. 24H1 has 2,753 overseas stores, a net increase of 266, including 343 direct-run stores and 2,410 partner and agency model stores. Currently, the number of stores in the US has reached 200. The average number of overseas stores increased by 21.8%, and same-store sales increased strongly by 16.3%.
The number of TOP TOY stores is growing rapidly, and the brand's influence continues to grow. TOPTOY's revenue in the first half of the year was 0.43 billion yuan, yoy +38%. It achieved profit for 3 consecutive quarters, and achieved a total GMV of 0.625 billion yuan through multiple channels. By the end of the quarter, TOP TOY had a total of 195 offline stores, a net increase of 35 stores in Q2, including 21 direct-run stores and 174 franchised stores.
Investment suggestion: The IP design+product is driven by Wang Shuangwheel. The company continues to promote the IP strategy, cooperate with well-known IPs such as Disney and Marvel to launch a series of high-margin products, while actively developing its own brands to enhance product quality and competitiveness. In the future, Mingchuang Premium will continue to accelerate its global layout, focus on expanding developed markets such as Europe and the US, and further improve its brand vision of the “World's No.1 IP Design Group”. It is estimated that in 24/25/26, the company's revenue will reach 15.892/19.387/22.494 billion yuan, and net profit to mother will reach 2.771/3.282/3.992 billion yuan, yoy +56.7%/18.5%/21.6%, respectively. The company's shareholders' returns show strong confidence, are optimistic about the company's IP strategic prospects and continued high overseas store growth rate, and maintain a “buy” rating.