Core views
In the first half of 2024, the company achieved revenue of RMB 7.759 billion, an increase of 25.0% year on year; realized net profit to mother of 1.17 billion yuan, an increase of 16.4% year on year; realized adjusted net profit of RMB 1.242 billion, an increase of 17.8% year on year. The company's domestic and overseas stores have achieved rapid growth, firmly established the US and global supply chain systems, which are the world's largest consumer markets, and reinvent a new growth path. The continued increase in the share of IP products and the gradual improvement of the Top Toy business format guarantee the profit margins of leading industries.
occurrences
In the first half of 2024, the company achieved revenue of RMB 7.759 billion, an increase of 25.0% year on year; realized net profit to mother of 1.17 billion yuan, an increase of 16.4% year on year; realized adjusted net profit of RMB 1.242 billion, an increase of 17.8% year on year.
Brief review
Stores continue to open in China, and the same stores remain stable
In the first half of the year, Mingchuang Premium opened 189 new stores in the Chinese market, and 81 new stores were opened in the second quarter. The total number of stores reached 4,115. The Chinese business revenue increased 16.2% year-on-year.
In the first half of the year, China Mingchuang Premium achieved a 16.1% increase in GMV in offline stores, and same-store sales recovered to 98.3% in the same period last year (including a 0.9% increase in customer unit price and a 2.5% drop in customer flow). The company continued to strengthen its own products and supply chain construction to fully cope with the changing environment and lead the growth of interest consumption.
Overseas business continues to grow rapidly, and direct sales in the US expand rapidly
In the first half of the year, 266 new overseas markets were opened, and 167 new ones were opened in the second quarter, of which 105 were directly managed, with more than half coming from the US. The company is determined to develop the world's largest consumer market. With a global supply chain system and overseas talent pool, the company has entered 40 states and more than 200 stores. The overseas single-store perspective was strong. Major regions all achieved double-digit same-store growth, with same-store growth of 16% in the top 20 markets.
The IP strategy was strengthened, and the Top Toy model gradually improved.
The company's IP product sales account for more than 30%, the growth rate has reached 40%, and the overseas growth rate is 50%. Structural optimization brought about an increase in gross margin to an improvement in the TOP TOY model. The company's gross margin reached 43.7% in a single quarter, an increase of 1.2 pct over the previous month, and reached a new high. In addition, the company added 47 new Top Toy stores, and the total number of stores reached 195. The pace of expansion was further accelerated, and it has achieved three consecutive quarters of profit, and the business format is gradually maturing.
Interim dividends strengthen shareholder returns: On April 9, 2024, the company paid 90.5 million US dollars in dividends. During the interim reporting period, the company announced an interim dividend of 85.5 million US dollars, which is about 50% of the company's adjusted net profit up to the first half of 2024, and shareholder returns continued to increase.
Investment advice: The business of the Chinese division is stable, the IP strategy continues to increase the company's gross profit margin, and the layout of the US market is still the most critical point in the next phase. The company's financial year has been adjusted to match the natural year. Considering the rapid layout of direct stores in the US, we updated the profit forecast to: 2.609, 3.171, 3.697 billion yuan, corresponding PE of 14, 12, and 10, maintaining the “gain” rating.
Risk analysis
1. Franchisee and agent concentration risk. The concentration of franchisees is high, and the concentration of agents is higher than that of franchisees. Changes in franchise policies or agency policies may cause fluctuations in franchisees and agents, thereby affecting the company's operation and performance.
2. Agents control risk. Agents are responsible for local store operations, and the decline in the company's control over agents may damage brand image and company operations.
3. Increased store density in China may cause customer flow to be scattered, leading to a decline in store revenue. If the company's stores expand too fast, the customer flow may be scattered, causing the company's single store revenue to drop.
4. Global trade risks. The global trade pattern is volatile, and tariff disputes may cause export and overseas companies to face uncertainty and affect market development.
5. Increased competition in the industry. Other domestic retailers such as Sanfu, KKV, The Green Party, Nome, etc. may seize resources with the company and increase competition in the industry.