The company announced its results for the first half of 2024: in the first half of 2024, the company achieved operating income of 1.249 billion yuan, an increase of 10.3% over the previous year, and net profit of 0.179 billion yuan to mother, an increase of 31.5% over the previous year.

A number of businesses have maintained steady growth. 2024H1's revenue from home care products/pet and pet products/personal care products reached 1.164 billion yuan/47.63 million/34.75 million yuan, respectively, +11.5%/+5.3%/-18.4% compared with the same period last year. We believe that the company's product innovation strategy has been very effective. Through technological innovation, the company has created a high-margin explosives matrix, continuously improved the leading brand of insecticidal, mosquito repellent, and household cleaning products, and launched major products with differentiated, strong efficacy, and healthy ingredients. According to Chaoyun Group's interim results announcement for the six months ended June 30, 2024, citing NielsenIQ retail market data, Chaoyun Group's insecticidal and mosquito repellent products ranked first in comprehensive market share among similar products in China for ten consecutive years; in the first half of 2024, the company had the largest offline market share in various categories such as electric mosquito repellent, insecticidal aerosols, and toilet cleaners.

By channel, online channels are developing rapidly. 2024H1's online/offline channels achieved revenue of 0.406 billion yuan/0.843 billion yuan, +18.9%/+6.5%, respectively. Looking at online channels, the company is deeply involved in Taoxie, JD, and Pinduoduo, while creating new e-commerce channels to develop multiple channels.

Profitability improved significantly. 2024H1's net profit margin was 14.37%, +2.32pct year on year; gross profit margin was 46.35%, +5.05pct year on year, thanks to the company's enhanced brand power, continuous optimization of category and channel structure, and continuous improvement in supply chain operation efficiency. 2024H1's sales expense ratio, management expense ratio, and financial expense ratio were 25.43%, 6.95%, and -3.87%, respectively, compared with +2.06pct, -0.51pct, and +0.27pct, respectively.

Profit forecast and rating: We expect the company's net profit for 2024-2026 to be 0.19, 0.208, and 0.227 billion yuan, respectively, up 8.8%, 9.1% year-on-year. The current closing price corresponds to 2024-2025 PE 13 and 12 times. As a leading household and personal cleaning products company, the company, as a leading household and personal cleaning products company, gave the company a PE valuation of 15 to 16 times in 2024, corresponding to a reasonable value range of 2.14 to 2.29 yuan, or HK$2.36 to 2.51 (reference exchange rate) RMB 1 = HK$1.10), giving it an “superior to the market” rating.

Risk warning: Raw material prices fluctuate, market competition intensifies, and domestic market development falls short of expectations.