The first half of 2021 results are in line with our expectations.
The company announced its results for the first half of 2021: revenue of HK $704 million, year-on-year + 24.1%, month-on-month-5.9%; net profit of HK $267 million, corresponding to HK $0.32 per share, year-on-year + 17.99%, month-on-month-15.4% 6, in line with our expectations.
Trend of development
The Hong Kong market has gradually recovered and sales in overseas markets have slightly exceeded our expectations. In the first half of 2021, Hong Kong market revenue was + 6.5 per cent year-on-year to HK $298 million, mainly due to the gradual recovery of local consumption in Hong Kong; mainland market revenue from + 6.396 to HK $162 million; and overseas market revenue from + 80.7 per cent to HK $244 million. We believe that the company's main business is expected to continue to recover in the second half of the year. In addition, the company is actively developing new sales channels for online retail business layout.
Gross profit margin and operating margin rose in the first half of 2021 compared with the same period last year. In the first half of 2021, the company's gross profit margin was + 2.4 percentage points year-on-year to 71.0%, mainly due to the resumption of sales of home-made products. The rate of sales and management expenses is-1.3 percentage points year-on-year, operating profit margin is + 2.2 percentage points year-on-year to 49.3%, and operating profit is + 30.0% year-on-year to HK $347 million.
Other situations: 1) accounts receivable turnover days increased by 44 days to 215 days compared with the end of last year; 2) inventory turnover days increased by 21 days to 431 days compared with the end of last year; 3) accounts payable turnover days decreased by 16 days to 55 days compared with the end of last year; 4) in the first half of 2021, the company maintained a total of 69 retail stores worldwide.
Profit forecast and valuation
Keep the forecast for net profit per share in 2021 and 2022 unchanged at HK $0.72. 82.
The current share price corresponds to 15.4 times 2021 / 2022 / 13.5 times earnings.
Taking into account the market expectation that the recovery of the main business of the sector will lead to higher valuations of the sector as a whole, we maintain an outperform industry rating and raise our target price by 5.6% to HK $13.30, corresponding to 18.5 times 2021 price-to-earnings ratio and 16.2 times 2022 price-to-earnings ratio. There is 20.3% upside compared to the current share price.
Risk.
Demand in Hong Kong and the mainland declined, while sales management expenses increased.