Key points of investment

The company released its mid-year report. 24H1 achieved revenue of 0.37 billion yuan, +32.5% over the same period, and net profit attributable to mother +14.0%/+17.9% to 55/53.84 million yuan respectively. Benefiting from the rapid growth of shading products, revenue continued to grow at a high rate. 24Q2 achieved revenue of 0.2 billion yuan, or +28.2% year-on-year, with net profit attributable to mother and net profit excluding net profit of +0.17%/+10.6% to 31.71/30.9 million yuan respectively. The decline in Q2 profit was mainly due to increased cross-border e-commerce investment, compounded by a decline in the growth rate of shading fabrics with high profit rates.

The performance of finished shading products continues to be beautiful, and shading fabrics are growing steadily

By product, revenue from 24H1 sunshine fabric, shading fabric, dimmable fabric, and finished shading products was +6.3%, +8.2%, 4.0%, 142.5% to 0.8, 0.09, 0.05, and 0.13 billion yuan respectively. Shading fabrics showed a steady growth trend. The penetration rate of shading markets in developed countries reached 70%, the FMCG attributes are prominent, and the market space is broad; finished shading products are the company's strategic products to extend the industrial chain and cultivate the terminal consumer market. With high cost performance, finished shading products became the main revenue growth driver. engine.

The gross margin is rising steadily. The increase in the cost ratio is due to the increase in cross-border e-commerce investment of 24H1 gross margin of +3.3 pct to 41.5% year on year. Among them, the gross margins of sunshine fabrics, shading fabrics, dimmable fabrics, and finished curtains were 36.9%/43.5%/48.9%, respectively, compared to 23 full-year -1.8pct/+4.4pct/+0.4pct/+2.3pct. The increase in gross margin is mainly due to increased capacity utilization driving the unit cost reduction. Structural changes.

24H1 sales expense ratio/management cost rate/R&D cost rate/financial cost ratio, respectively, +2.6 pct/-0.7 pct/+0.3pct to 16.2%/5.5%/4.2%/-2.8% year over year. The expected increase in sales expenses is due to the company increasing investment in cross-border e-commerce platform expenses and advertising expenses to promote sales, and the reduction in the management fee rate reflects cost reduction and efficiency; 24H1 operating margin/net income margin is expected to be 16.9% year-on-year, respectively Profitability pressure is mainly due to the fact that the growth rate of finished shading products with low net interest rates is significantly faster than that of shading fabrics with high net interest rates. Profitability is expected to improve in the future as the rapid growth of finished shading products exerts positive operating leverage.

Profit forecasting and valuation

The company is expected to achieve revenue of 0.84/1.05/1.28 billion yuan in 24-26, +32%/26%/22% year-on-year, and net profit to mother of 0.12/0.16/0.2 billion yuan, respectively, corresponding growth rate of 33%/30%/25%. As of 2024/8/26, PE is 13/10/8X. As a leading domestic company for functional shading materials, Seodaemun is currently receiving orders in February-March. It has benefited from an increase in “domestic penetration rate+overseas market share” for a long time. In the future, it will enter a period of accelerated growth and maintain a “buy” rating.

Risk warning: raw material prices fluctuate; cross-border e-commerce business development falls short of expectations