简评及投资建议。[Table_Summary]
Key points of investment:
The company released its 2024 semi-annual report. 1H24 achieved revenue of 6.766 billion yuan, a year-on-year increase of 31.10%; net profit to mother was 1.448 billion yuan, a year-on-year decrease of 27.54%, after deducting non-net profit of 1.419 billion yuan, a year-on-year decrease of 22.86%. Diluted EPS of 0.27 yuan, return on net assets of 7.86%. Net operating cash flow of $0.114 billion.
Brief review and investment advice.
1. The annual revenue of 1H24 was 6.766 billion yuan, up 31.10% year on year. Among them, revenue from market operations, product sales and trade services increased 25.99%, 37.24%, and 30.63%, respectively. 2Q24 revenue of 4.085 billion yuan increased 34.36% year over year. 1H24 gross margin increased 2.49 pct year over year to 33.08%, and 2Q24 gross margin decreased 1.12 pct year over year to 29.16%.
2. The cost rate for the 1H24 period was 5.55%, a year-on-year decrease of 2.39 pcts. Among them, the sales expense ratio decreased by 0.14 pct to 1.36% year over year; the management expense ratio decreased by 1.97 pct to 3.22% year over year; the financial expense ratio decreased by 0.25 pct to 0.79% year over year; and the R&D expense ratio decreased by 0.03 pct to 0.17% year over year.
3. The net profit of 1H24 was 1.448 billion yuan, a year-on-year decrease of 27.54%. It is estimated that the net profit of the main business of 1.35 billion yuan increased 58% year-on-year. The decline in 1H24 profit was affected by a decrease of 1.051 billion yuan in investment income and asset disposal income, and an increase of 0.501 billion yuan in net profit from market operations and trade services. Among them, investment income from joint ventures and joint ventures (real estate subsidiaries) was 0.098 billion yuan, a year-on-year decrease of 0.919 billion yuan. We estimate that after excluding investment income and asset disposal profit and loss (after tax), the main business contributed 1.35 billion yuan, a year-on-year increase of 58%; of these, the net profit of the main 2Q24 business was 0.64 billion yuan, an increase of 23% over the previous year.
4. Digital market operations, and the construction of global digital trade centers is progressing steadily. ① Joint universities completed the index model update and iterated the index platform website to achieve interconnection with the Chinagoods platform; completed sorting of index data assets and promoted data resource inclusion; “Data Elements Empowering the Facilitating Digital Trade of Small Commodities” was selected as the first batch of 20 “Data Factor X” typical cases by the National Data Administration. The company formulated a 3-year action plan: 24 years to improve the index model; 25 years to expand the index system and develop sub-indices; 26 years to promote the internationalization of small commodity classification standards. ② The first phase of the Global Digital Trade Center project completed 62% of the total project volume, and the main market segment of the second phase project came to an end; about 68% of the main structure above ground in the commercial office sector was completed, and construction of super-high-rise buildings began.
5. The scale of the new business is growing rapidly, and profits are highly flexible. ① 1H24 Chinagoods added more than 0.4 million registered buyers, with a cumulative total of more than 4.45 million, achieving a GMV of 45 billion yuan, an increase of 40.6% over the previous year. Big data company (Chinagoods platform operator) 1H24's net profit was 72.79 million yuan, up 56.89% year over year. In the first half of the year, 45 third-party digital service products were added, and a total of 194 were launched. The company launched 5 self-developed AI products, and 0.017 million users have experienced the Xiaoshang AI series in depth. ② Yiwu Pay's GMV exceeded 12 billion yuan in the first half of the year, with net profit of 27.38 million, which significantly reversed losses (1H23 was -5.72 million).
6. The export value of 1H24 Yiwu increased by 21%, of which 1039 exports increased by 29%, and the market is booming. 1H24 Yiwu's total import and export volume was 324.8 billion yuan, up 20.7% year on year. Among them, exports were 288 billion yuan, up 21.3% year on year; imports were 36.7 billion yuan, up 16.4% year on year. Looking at trade regions, 1H24 Yiwu imported and exported 57.83 billion yuan, 53.95 billion yuan and 33.08 billion yuan respectively to Africa, Latin America and ASEAN, up 17.1%, 32.4% and 40.2% year on year, respectively; imports and exports to India and Saudi Arabia were 16.09 billion yuan and 7.9 billion yuan respectively, up 23.5% and 17.2% year on year, respectively.
1H24 Yiwu exported 232.87 billion yuan through market procurement trade, an increase of 28.7% over the previous year, accounting for 80.8% of total exports. The market is booming. The average daily passenger traffic in Yiwu in 1H24 is 0.22 million, the average number of foreign supermarkets per day increased by 80% + by 3,600, and the main passenger traffic indicators in the market exceeded the same period in '19.
Maintain judgment on the company. In 2019, the company proposed the strategy of “using the market as the main business, using numbers as the link, and using the platform as support to build a comprehensive international trade service provider”. Dynamic rent adjustments consolidated the growth logic, and the new business gradually contributed to profits and had plenty of room for monetization. We believe that looking ahead to the next three years, the market business will enter a new cycle of expansion. The profit growth of new businesses under ecosystem resonance is expected to be released nonlinearly, and may further open up valuation space upward.
Maintain profit forecasts and valuations. Net profit for 2024-2026 is expected to be 2.981 billion yuan, 3.199 billion yuan, and 4.48 billion yuan, respectively, up 11.4%, 7.3%, and 40.1% year-on-year. We value offline and online businesses using PE and PGMV methods, respectively. Excluding the net profit of the Chinagoods platform, the offline business was given 16-20 times PE in 2024, corresponding to a reasonable market value range of 34 billion yuan to 42.4 billion yuan, and the online business was given 80 billion yuan to 0.30-0.35 times PGMV in 2024, corresponding to a market value of 24-28 billion yuan. The overall reasonable market value range for the company was 58-70.4 billion yuan, and the reasonable stock price range was 10.57-12.85 yuan per share. Maintain an investment rating of “superior to the market”.
Risk warning: Market expansion falls short of expectations, capital expenditure pressure, new business development falls short of expectations, insufficient talent reserves, and uncertainty in the foreign trade environment.
