Caibai Co., Ltd. released its 2024 semi-annual report: 1H24 achieved revenue of 10.989 billion yuan, +31.44% year over year, realized net profit of 0.4 billion yuan, -3.00% year over year, and realized net profit deducted from non-mother 0.386 billion yuan, or -0.04% year over year.

Results for the second quarter of 2024: In the second quarter of 2024, revenue was 4.673 billion yuan, +41.3% year over year, net profit to mother was 0.127 billion yuan, -28.31% year over year, and net profit after deducting non-return to mother was 0.134 billion yuan, or -22.36% year on year.

Brief review and investment advice

1. 2Q24 revenue increased 41% year-on-year, and the increase in the share of investment funds reduced 1H24's gross margin to achieve revenue of 10.989 billion yuan, +31.44% year over year, realized net profit to mother 0.4 billion yuan, -3.00% year over year, and realized net profit without deduction of 0.386 billion yuan, or -0.04% year on year.

Looking at the second quarter alone, 2Q24 revenue was 4.673 billion yuan (+41%), net profit due to mother 0.127 billion yuan (-28%), deducted from non-return mother 0.134 billion yuan (-22%); of these, gross profit was 0.364 billion yuan (-5.41%), gross profit ratio 7.8% (-3.85pct), period expenses were 0.141 billion yuan (+43.54%), and the period expense ratio was 3% (-0.05pct).

Judging from industry data, jewellery/gold bar consumption each increased by 72%/-52% in 2Q24. We believe that the company benefited from a boom in gold bars and a high increase in revenue, but gross margin was under pressure due to changes in product structure.

2. Revenue of 1H24 e-commerce subsidiaries increased 50% year-on-year, and 11 new offline stores (1) 1H24 stores. Changes: 1H24 opened 11 new offline stores. By the end of June 2024, the total number of company stores was 93, including 63 stores in Beijing (including the main store), 21 stores in other parts of North China, and 9 stores outside North China. 1H24 The first store opened in Wuhan and entered the central China region.

(2) E-commerce subsidiaries: 1H24 e-commerce subsidiary's revenue of 2.3 billion yuan increased 50% year over year, net profit of 14.15 million yuan increased 18.72% year over year, and net interest rate of 0.62% (-0.16pct).

Update profit forecasts. We expect the net profit of the company to return to mother in 2024-2026 of 0.73/0.83/0.92 billion yuan each, giving 13-16x PE in 2024, corresponding to a reasonable market value range of 9.5-11.7 billion yuan and a reasonable value range of 12.22-15.04 yuan, maintaining the “superior to the market” rating.

Risk warning: risk of gold price fluctuations, increased risk of industry competition, risk of market downturn.