The company's 24H1 revenue was 7.76 billion yuan/ +25.0%, adjusted net profit was 1.24 billion yuan/ +17.8%, 24Q2 revenue was 4.04 billion/ +24.1%, adjusted net profit 0.63 billion/ +9.4%, and adjusted net interest rate after excluding exchange gains and losses, was 15.6% /+0.1pct. The consumer market of interest is broad. The “1+3” moat of the company's “1 Chinese supply chain+global IP+global design+global channel” is stable. They are optimistic about the steady expansion of famous companies domestically, the overseas market continues to grow at a high rate, and the long-term growth brought about by TOP TOY's continuous incubation. Maintain a “Highly Recommended” rating.
Performance is in line with expectations, and revenue growth continues to be high. The company 24H1 achieved revenue of 7.76 billion yuan/ +25.0%, net profit of 1.18 billion yuan/ +15.7%, adjusted net profit of 1.24 billion yuan/ +17.8%, single 24Q2 company revenue 4.04 billion/ +24.1%, gross profit margin 43.9% /+4.1pct, adjusted net profit of 0.63 billion/ +9.4%, adjusted net interest rate of 15.5% /-2.1pct, excluding exchange gains and losses 15.6% /+0.1pct
Mainland Famous Innovation: Maintaining relatively rapid store opening, same-store sales growth continues to recover. The revenue of offline stores of the 24Q2 brand in mainland China was 2.31 billion yuan/ +18.3%. The net number of stores opened in 24Q2 was 81, and the number of stores at the end of Q2 was 4115. The mainland market revenue of the 24H1 Mingchuang brand reached 4.59 billion/ +16.2%, mainly due to the 16.0% increase in the average number of offline stores in the mainland, and the sales of the 24H1 Mingchuang brand in mainland China were about 98.3% of the same period last year. The 24H1 Mingchuang Premium brand achieved GMV 7.097 billion yuan/ +15.6% in China.
Overseas innovation: rapid expansion of stores, rapid growth in same-store sales. 24Q2 Mingchuang's overseas revenue was 1.51 billion/ +35.5%, with a net opening of 157 overseas stores in Q2 and 2,753 stores at the end of Q2. Overseas revenue of 24H1 Mingchuang brand was 2.73 billion yuan/ +42.6%, of which the average number of stores increased by 21.8%, and same-store sales increased strongly by 16.3%; at the end of 24H1, Mingchuang's overseas revenue accounted for 35.2% /+4.3pct of the company's revenue, and the overseas share continued to rise. 24H1 Mingchuang's total sales GMV in overseas markets reached 6.401 billion yuan/ +41.1%. By market, Asia (excluding China) /North America/Latin America/Europe/other markets achieved same-store GMV growth rates of 15.0%/12.3%/21.3%/10.4%/-1.2%, respectively.
TOPTOY: The inflection point of operations has been established, and store opening has accelerated markedly. 24Q2 TOPTOY's revenue was 0.21 billion/ +24.3%, the net number of stores increased by 35 month-on-month in 24Q2, and 195 stores at the end of 24Q2. 24H1TOPTOY achieved total revenue of 0.59 billion yuan/ +37.9%, mainly contributed by 13.6% increase in same-store sales and rapid store opening.
Investment advice. In the short term, the company's domestic operations are growing steadily and developing rapidly overseas; in addition to mid-term dividends, the company plans to repurchase no more than HK$2 billion in the next year, and shareholder returns are impressive. Looking at the long-term, there is a broad consumer market of interest. The “1+3” moat of the company's “1 Chinese supply chain+global IP+global design+global channel” is stable. They are optimistic about Mingchuang's steady domestic expansion, the overseas market continues to grow at a high rate, and the long-term growth brought about by TOP TOY's continuous incubation. The company's 2024E/25E/26E adjusted net profit is estimated to be 2.89/3.61/4.33 billion, respectively, maintaining the “Highly Recommended” rating.
Risk warning: Store expansion falls short of expectations, and single store revenue growth falls short of expectations.